An insurance policy sells for $700. Based on past data, an average of 1 in 50 policyholders will file a $5,500 claim, an average of 1 in 100 policyholders will file a $10,000 claim, and 1 in 200 policyholders will file a $25,000 claim. What is the expected value of each policy the insurance company sells?
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 policy sells for $700. Based on past data, an average of 1 in 50 policyholders will file a $5,500 claim, an average of 1 in 100 policyholders will file a $10,000 claim, and 1 in 200 policyholders will file a $25,000 claim. What is the expected value of each policy the insurance company sells?
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