. Calculate the expected value. $_____ b. How much should the company charge as an average premium so that it breaks even on its claim cost? $______ c. How much should the company charge to make a profit of $50 per policy?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
10
The table shows claims and their probabilities for an insurance company.
|
Amount of claim ( to the nearest $20,000) |
Probability |
| $0 | 0.70 |
| $20,000 | 0.18 |
| $40,000 | 0.05 |
| $60,000 | 0.05 |
| $80,000 | 0.01 |
| $100,000 | 0.01 |
a. Calculate the
$_____
b. How much should the company charge as an average premium so that it breaks even on its claim cost?
$______
c. How much should the company charge to make a profit of $50 per policy?
$_____
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