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Dunkins Corporation would like to buy insurance for their employee. The distributions are as follows: Betty, Carol & Emily Fendy & Qalid Loss Probability Loss Outcome Probability Outcome RM15,000 RM20,000 0.4 RM12,000 RM21,000 0.7 0.3 0.6 Assume the losses are independent, you are required to: a) Determine the expected loss and standard deviation without the pooling arrangement for Dunkins Corporation. b) Determine the expected loss and standard deviation with the pooling arrangement Dunkins Corporation.

Dunkins Corporation would like to buy insurance for their employee. The distributions are as follows: Betty, Carol & Emily Fendy & Qalid Loss Probability Loss Outcome Probability Outcome RM15,000 RM20,000 0.4 RM12,000 RM21,000 0.7 0.3 0.6 Assume the losses are independent, you are required to: a) Determine the expected loss and standard deviation without the pooling arrangement for Dunkins Corporation. b) Determine the expected loss and standard deviation with the pooling arrangement Dunkins Corporation.

College Algebra (MindTap Course List)
College Algebra (MindTap Course List)
12th Edition
ISBN:9781305652231
Author:R. David Gustafson, Jeff Hughes
Publisher:R. David Gustafson, Jeff Hughes
Chapter8: Sequences, Series, And Probability
Section8.7: Probability
Problem 58E: What is meant by the sample space of an experiment?
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Dunkins Corporation would like to buy insurance for their employee. The distributions are as follows: Betty, Carol & Emily Fendy & Qalid Probability Loss Loss Outcome Probability Outcome RM12,000 RM21,000 0.7 RM15,000 0.4 0.3 RM20,000 0.6 Assume the losses are independent, you are required to: a) Determine the expected loss and standard deviation without the pooling arrangement for Dunkins Corporation. b) Determine the expected loss and standard deviation with the pooling arrangement Dunkins Corporation.
Transcribed Image Text:Dunkins Corporation would like to buy insurance for their employee. The distributions are as follows: Betty, Carol & Emily Fendy & Qalid Probability Loss Loss Outcome Probability Outcome RM12,000 RM21,000 0.7 RM15,000 0.4 0.3 RM20,000 0.6 Assume the losses are independent, you are required to: a) Determine the expected loss and standard deviation without the pooling arrangement for Dunkins Corporation. b) Determine the expected loss and standard deviation with the pooling arrangement Dunkins Corporation.
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