Y is the present-value random variable of an annuity that pays 1 at the beginning of each year that (x) survives.
You are given:
(i) E(Y) @ delta = 10
(ii) E(Y) @ 2delta = 6.
(iii) i = 1/24
Calculate the variance of Y.
The equation for the Var(Y) to use is 1/d2 * [(^2)A_x Ė A_x^2]
(Excuse the notation the 2's are raised and the x's are subscripts)
I got 1/d^2 to be 625 and I thought (i) was saying that A_x = 10 and (ii) that (^2)A_x = 6, but plugging these values in doesnít return the right answer. Does anyone know what Iím doing wrong? Thanks!