For this problem, use the fact that the expected value of an event is a probability weighted average, the sum of each
Posted: Fri Jul 01, 2022 7:55 am
For this problem, use the fact that the expected value of anevent is a probability weighted average, the sum of each probableoutcome multiplied by the probability of the event occurring.You own a house worth $400,000 that is located on a river. If theriver floods moderately, the house will be completely destroyed.This happens about once every 20 years. If you build a seawall,the river would have to flood heavily to destroy your house, whichonly happens about once every 100 years. What would be theannual premium without a seawall for an insurance policy thatoffers full insurance? Without a seawall, the annual premium is $ enter your responsehere.