Transition Matrices for Actuarial Forecasting
Transition Matrices for Actuarial Forecasting - R for Actuarial Science
Suppose the transition probabilities are a function of the age of a person. The transition probability of a person aged x moving:
from Healthy to Sick state is 0.007x
from Healthy to Death state is 0.001x
from Sick to Death state is 0.002(100-x)
from Sick to Healthy is 0.006(100-x).
Exercises
Assuming 100 is the maximum age. Calculate the probability of:
1. Healthy person aged 30 will be in Sick state after 4 years.
2. Sick person aged 25 will be in Death state after 7 years.
CS2B - Paper D