Consider a bank that wants to model processing errors in its retail banking business. The number of such errors in a given year is denoted by random variable N. The dollar loss amount when a processing error occurs is denoted by random variable S. Which of the following procedures is the most likely implementation of the first step of the loss distribution approach?
AConvolute a marginal Poisson distribution (to characterize N) with a Weibull (to characterize S)
BConvolute a marginal Poisson distribution (to characterize S) with a Weibull (to characterize N)
CConvolute a marginal lognormal distribution (to characterize N) with a Weibull (to characterize S)
DConvolute a marginal Poisson distribution (to characterize N) with a negative binomial (to Characterize S)
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