When all factors are taken into account, an insurance
company
estimates that the probability of my father making a claim for
damages to his pontoon boat for $5000 is 0.1, and that the
probability of the pontoon boat being totally destroyed is .005.
Should that tragedy happen, the
company will have to pay $15,000.
The
company charges my father $1000 for the insurance policy. What
is the expected value of this policy to my father?
- When All Factors Are Taken Into Account An Insurance Company Estimates That The Probability Of My Father Making A Claim 1 (147.32 KiB) Viewed 81 times
Problem 1: What is the expected value of A. $0.83 the Insurance Policy to my father? B. -$16.67 Problem 2: What is the expected value of Michelle's game? C. Yes, since I expect to gain $50. Problem 3: How much to you expect to win D. $3, rounded to the nearest dollar. if you play this game 100 times? E. Yes, since the expected value is $3,250. Problem 4: Is it worthwhile to enter the F. No, since the expected value is less than the cost. race? G. Yes, since the expected value is greater than the Problem 5: Should your
company invest in cost. the project? Problem 6: Should the manufacturer I. -$425 proceed with the plans for the new moustrap? J. No, since I expect to lose 50. Problem 7: What is your expected grade for K. 1.7 points, rounded to the nearest tenth. the entire test? L. $10.83 Problem 8: What is the expected value of the game? M. 21.7 points, rounded to the nearest tenth. Problem 8: Should I play the game? H. $200 4.