An insurance company charges $1,142 per year to insure your car. They calculate that there is a 8% chance that you have an accident each year, and that if you do have an accident, it will cost them $3,709. What is the expected value for the insurance company of your policy? Give your answer to two decimal places.
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.
An insurance company charges $1,142 per year to insure your car. They calculate that there is a 8% chance that you have an accident each year, and that if you do have an accident, it will cost them $3,709. What is the
Expected value:
The expected value of a random variable is the sum of the possible values that the random variable can take multiplied with corresponding probabilities.
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