The table shows claims and their probabilities for an insurance company. Amount of Claim Probability $0 0.60 $50,000 0.25 $100,000 0.09 $150,000 0.04 $200,000 0.01 $250,000 0.01 (a) Calculate the expected value. (b) How much should the company charge as an average premium so that it breaks even on its claim costs? (c) How much should the company charge to make a profit of per policy? (a) $32,000 (b) $16,,000 (c) 32,080 (a) $32,000 (b) $16,000 (c) 16,080 (a) $16,000 (b) $32,000 (c) 32,080 (a) $32,000 (b) $32,000 (c) 32,080
The table shows claims and their probabilities for an insurance company. Amount of Claim Probability $0 0.60 $50,000 0.25 $100,000 0.09 $150,000 0.04 $200,000 0.01 $250,000 0.01 (a) Calculate the expected value. (b) How much should the company charge as an average premium so that it breaks even on its claim costs? (c) How much should the company charge to make a profit of per policy? (a) $32,000 (b) $16,,000 (c) 32,080 (a) $32,000 (b) $16,000 (c) 16,080 (a) $16,000 (b) $32,000 (c) 32,080 (a) $32,000 (b) $32,000 (c) 32,080
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.8: Probability
Problem 55E
Related questions
Concept explainers
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.
Topic Video
Question
The table shows claims and their probabilities for an insurance company.
Amount of Claim Probability
$0 0.60
$50,000 0.25
$100,000 0.09
$150,000 0.04
$200,000 0.01
$250,000 0.01
(a) Calculate theexpected value .
(b) How much should the company charge as an average premium so that it breaks even on its claim costs?
(c) How much should the company charge to make a profit of per policy?
Amount of Claim Probability
$0 0.60
$50,000 0.25
$100,000 0.09
$150,000 0.04
$200,000 0.01
$250,000 0.01
(a) Calculate the
(b) How much should the company charge as an average premium so that it breaks even on its claim costs?
(c) How much should the company charge to make a profit of per policy?
(a) $32,000 (b) $16,,000 (c) 32,080
(a) $32,000 (b) $16,000 (c) 16,080
(a) $16,000 (b) $32,000 (c) 32,080
(a) $32,000 (b) $32,000 (c) 32,080
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, probability and related others by exploring similar questions and additional content below.Recommended textbooks for you
Algebra & Trigonometry with Analytic Geometry
Algebra
ISBN:
9781133382119
Author:
Swokowski
Publisher:
Cengage
Algebra and Trigonometry (MindTap Course List)
Algebra
ISBN:
9781305071742
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning
Algebra & Trigonometry with Analytic Geometry
Algebra
ISBN:
9781133382119
Author:
Swokowski
Publisher:
Cengage
Algebra and Trigonometry (MindTap Course List)
Algebra
ISBN:
9781305071742
Author:
James Stewart, Lothar Redlin, Saleem Watson
Publisher:
Cengage Learning