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Avicena, a major insurance company, offers five-year life insurance policies to 65-year-olds. If the holder of one of these policies dies before the age of 70, the company must pay out $265 000 to the beneficiary of the policy. Executives at Avicena are considering offering these policies for $4970 each. Suppose that for each holder of a policy there is a 2% chance that they will die before the age of 70 and a 98% chance they will live to the age of 70. (If necessary, consult a list of formulas.) If the executives at Avicena know that they will sell many of these policies, should they expect to make or lose money from offering them? How much? 00 To answer, take into account the price of the policy and the expected value of the amount paid out to the beneficiary. O Avicena can expect to make money from offering these policies. In the long run, they should expect to make epesos on each policy sold. O Avicena can expect to lose money from offering these policies. In the long run, they should expect to lose | pesos on each policy sold. O Avicena should expect to neither make nor lose money from offering these policies.

Avicena, a major insurance company, offers five-year life insurance policies to 65-year-olds. If the holder of one of these policies dies before the age of 70, the company must pay out $265 000 to the beneficiary of the policy. Executives at Avicena are considering offering these policies for $4970 each. Suppose that for each holder of a policy there is a 2% chance that they will die before the age of 70 and a 98% chance they will live to the age of 70. (If necessary, consult a list of formulas.) If the executives at Avicena know that they will sell many of these policies, should they expect to make or lose money from offering them? How much? 00 To answer, take into account the price of the policy and the expected value of the amount paid out to the beneficiary. O Avicena can expect to make money from offering these policies. In the long run, they should expect to make epesos on each policy sold. O Avicena can expect to lose money from offering these policies. In the long run, they should expect to lose | pesos on each policy sold. O Avicena should expect to neither make nor lose money from offering these policies.

Holt Mcdougal Larson Pre-algebra: Student Edition 2012
Holt Mcdougal Larson Pre-algebra: Student Edition 2012
1st Edition
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Chapter11: Data Analysis And Probability
Section11.8: Probabilities Of Disjoint And Overlapping Events
Problem 2C
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Avicena, a major insurance company, offers five-year life insurance policies to 65-year-olds. If the holder of one of these policies dies before the age of 70, the company must pay out $265 000 to the beneficiary of the policy. Executives at Avicena are considering offering these policies for $4970 each. Suppose that for each holder of a policy there is a 2% chance that they will die before the age of 70 and a 98% chance they will live to the age of 70. (If necessary, consult a list of formulas.) If the executives at Avicena know that they will sell many of these policies, should they expect to make or lose money from offering them? How much? To answer, take into account the price of the policy and the expected value of the amount paid out to the beneficiary. EC O Avicena can expect to make money from offering these policies. In the long run, they should expect to make pesos on each policy sold. O Avicena can expect to lose money from offering these policies. In the long run, they should expect to lose| pesos on each policy sold. O Avicena should expect to neither make nor lose money from offering these policies.
Transcribed Image Text:Avicena, a major insurance company, offers five-year life insurance policies to 65-year-olds. If the holder of one of these policies dies before the age of 70, the company must pay out $265 000 to the beneficiary of the policy. Executives at Avicena are considering offering these policies for $4970 each. Suppose that for each holder of a policy there is a 2% chance that they will die before the age of 70 and a 98% chance they will live to the age of 70. (If necessary, consult a list of formulas.) If the executives at Avicena know that they will sell many of these policies, should they expect to make or lose money from offering them? How much? To answer, take into account the price of the policy and the expected value of the amount paid out to the beneficiary. EC O Avicena can expect to make money from offering these policies. In the long run, they should expect to make pesos on each policy sold. O Avicena can expect to lose money from offering these policies. In the long run, they should expect to lose| pesos on each policy sold. O Avicena should expect to neither make nor lose money from offering these policies.
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