Question

What survival rate in the 10th year would make the average of loss over the 10 year period equal to 38.0%

Answer 1

Answer: 63%

Explanation:

First step

Find the 10th year rate of loss that will make the average of loss over the 10 years to equal 38.0%.

Assume this rate is x;

`((36.2 + 29.0 + 46.2 + 37.5 + 40.9 + 40.0 + 32.6 + 40.5 + 40.1 + x))/(10) = 38.0\\\\(343 + x)/(10) = 38\\\\x = 380 - 343\\\\x = 37`

x = 37%

Second step - Survival rate

The survival rate is calculated by;

= 1 - rate of loss

= 1 - 37%

= 63%