2) An insurance company charges $900 annually for auto policies for teenagers. The policy specifies the $1,500 for a minor accident and $8,000 for a major accident. The probability of a company will раy teenager having a minor accident during the year is 0.15, and of having a major accident is 0.05. Let X represent the amount that the insurance company pays out to a customer during the year. a) Make a table showing the distribution of X. P(X = x) b) What is the expected value of X? c) What does that mean for the insurance company?

A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
icon
Related questions
Question
pls help
2) An insurance company charges $900 annually for auto policies for teenagers. The policy specifies the
pay $1,500 for a minor accident and $8,000 for a major accident. The probability of a
company
will
teenager having a minor accident during the year is 0.15, and of having a major accident is 0.05. Let X
represent the amount that the insurance company pays out to a customer during the year.
a) Make a table showing the distribution of X.
P(X = x)
b) What is the expected value of X?
c) What does that mean for the insurance company?
d) What is the standard deviation of X?
Transcribed Image Text:2) An insurance company charges $900 annually for auto policies for teenagers. The policy specifies the pay $1,500 for a minor accident and $8,000 for a major accident. The probability of a company will teenager having a minor accident during the year is 0.15, and of having a major accident is 0.05. Let X represent the amount that the insurance company pays out to a customer during the year. a) Make a table showing the distribution of X. P(X = x) b) What is the expected value of X? c) What does that mean for the insurance company? d) What is the standard deviation of X?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Recommended textbooks for you
A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
Probability
ISBN:
9780134753119
Author:
Sheldon Ross
Publisher:
PEARSON
A First Course in Probability
A First Course in Probability
Probability
ISBN:
9780321794772
Author:
Sheldon Ross
Publisher:
PEARSON