6. For an insurance coverage, claim counts follow a binomial distribution with m = 4. q varies by insured withthe following probabilities:0.10.20.3Probability 0.50.250.25An insured submits 0 claims in the first year and 3 claims in the second year.Calculate the predictive probability of the same insured submitting 0 claims in the third year.

Answered: 6. For an insurance coverage, claim…

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...

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Suppose a stock sells for $45 today. The annual volatility of the stock is 37%, and analysts predict the expected price of the stock in a year will be $50. What is the probability that in one year the stock will sell for more than $53? 28.4% 25.6% O 34.7% O 36.6%
ANOTHER EXAMPLE• Consider the following information on returnsand probabilities: State Probability X ZBoom .25 15% 10%Normal .60 10% 9%Recession .15 5% 10% • What are the expected return and standarddeviation for a portfolio with an investmentof $6,000 in asset X and $4,000 in asset Z?
1.A husband and wife take out an insurance policy for a 20 year term. It is estimated the probability of being alive in 20 years time is 0.8 for the husband, and 0.9 for the wife. What is the probability that in 20 years time, just one of them will be alive. Explain your reasoning carefully.
A concession stand at a pool tends to get $500 in profit on hot days, $300 on average days, and $200 on cool days. If it is hot 39% of the time, average 47% of the time, and cool 14% of the time, what is the expected value of their profit? Please round to the nearest whole dollar. Profit = Please express your answer as a whole number without any decimals or any other symbols. On a particular type of property insurance policy, about 1 in every 5,000 policies a year tend to make a sizable claim (in other words, a probability of 0.02%, or 0.0002). The claims tend to average about s110000. What would be a fair rate on this policy (before adjusting to cover operating costs)? Please round to the nearest whole dollar. Fair price = $ Please enter only digits into the box. Do not include dollar signs, commas, or any other symbols
11. Find the probability of the indicated event if P(E) = 0.20 and P(F)= 0.35. Find P(E and F) if P(E or F)= 0.30 P(E and F) = (Simplify your answer.)
A certain model phone costs $599. The probability of the phone breaking over the course of a year is .07. What is the maximum amount you could pay for phone replacement insurance and still have a non-negative expected value on the policy? In other words, for what price or below would it be worth it to get the insurance?
Suppose that you are offered the following "deal." You roll a six sided die. If you roll a 6, you win $17. If you roll a 3, 4 or 5, you win $5. Otherwise, you pay $6. a. Complete the PDF Table. List the X values, where X is the profit, from smallest to largest. Round to 4 decimal places where appropriate. Probability Distribution Table P(X) nd b. Find the expected profit. (Round to the nearest cent) c. Interpret the expected value. Of you play many games you will likely win on average very close to $3.33 per game. O You will win this much if you play a game. O This is the most likely amount of money you will win. or d. Based on the expected value, should you play this game? O Yes, since the expected value is positive, you would be very likely to come home with more money if you played many games. O Yes, since the expected value is 0, youvould be very likely to come very close to breaking even if you played many games, so you might as well have fun at no cost. No, since the expected…
28 The probability that a 50-year-old man will survive a fixed length of time is 0.995. An insurance company will sell him a $20,000 life insurance policy for this length of time for a premium of $200. What is the expected gain for the insurance company? * $200 $100 $250 $150
You are given the following probability distribution for the returns on Security A and Security B: Probability 0.3 0.3 0.3 0.1 Return on Security A 37% 7% 20% -15% Return on Security B 13% 19% 26% -22% Assume you invest $4,000 in Security A and $6,000 in Security B. What are the expected return and standard deviation of your portfolio?
A certain portfolio’s value increases by 30% during a financial boom, increases by 5% during normal times and it decreases by 2% during a recession. Suppose each scenario is equally likely and you invested $200 in this portfolio. . 1.Create a probability model for your net gain. 2.What is the expected net gain when you invest $200 in this portfolio? 3.What’s the standard deviation of your net gain when you invest $200 in this portfolio?
The probability that a 30-year-old male in the U.S. will die within one year is about 0.00142. An insurance company is preparing to sell a 30-year-old male a one-year, $45,000 life insurance policy. How much should it charge for its premium in order to have a positive expectation for the policy? (Round your answer to the nearest dollar.)
11.8.3 The table shows claims and their probabilities for an insurance company. Use the table to answer parts a through c. Amount of claim (to the nearest $50,000) Probability $0 0.65 $50,000 0.23 $100,000 0.05 $150,000 0.04 $200,000 0.02 $250,000 0.01 a.Calculate the expected value. $_______

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