There is a 0.9988 probability that a randomly selected 28 -year-old male lives through the year. A life insurance company charges $198 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit From the perspective of the 28-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is$ The value corresponding to not surviving the year is$ (Type integers or decimals. Do not round.)
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
There is a 0.9988 probability that a randomly selected 28 -year-old male lives through the year. A life insurance company charges $198 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit
From the perspective of the 28-year-old male, what are the monetary values corresponding to the two
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