A company has sold an insurance policy. A loss event occurs with aprobability of 0.2 . If the loss event has occurred, then the amount ofdamage is a r.v. & uniform on [0, 10].Suppose that the policy provides the complete coverage of the loss (so,now there is no restriction on maximal payment).Consider a portfolio of 10,000 independent policies of the type above.Suppose the company proceeds from a security level of 3 = 0.9.Select from below the number closest to the minimal premiumacceptable for the company. (The quantile q0.9,s≈ 1.282 ).A.approximately 2.077B.approximately 1.361C.approximately 0.038D.approximately 2.026E.approximately 1.031

Probability of loss = 0.2Loss is distributed uniformed on [0,10]security level = 0.9quantile = 1.282

Answered: A company has sold an insurance policy.…

Intermediate Algebra

19th Edition

ISBN:9780998625720

Author:Lynn Marecek

Publisher:Lynn Marecek

Chapter12: Sequences, Series And Binomial Theorem

Section12.3: Geometric Sequences And Series

Problem 12.58TI: What is the total effect on the economy of a government tax rebate of $500 to each household in...

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