Alderan Toy Store faces the following probability distribution of fire losses in its store over the next year: Probability0.800.150.05Loss$0$10,000$25,000 Calculate the expected value and standard deviation of Alderan’s losses for the year. Assume that Alderan Toy Store pools losses with Dagobah Toy Store, which has an identical loss distribution. Dagobah’s losses are independent of Alderan’s. Alderan and Dagobah agree to split the total losses in the pool equally. Show the revised probability distribution for the mean loss from the pool. Calculate the expected value and standard deviation of the pooled mean losses.

Answered: Alderan Toy Store faces the following…

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Question

Alderan Toy Store faces the following probability distribution of fire losses in its store over the next year:

Probability	0.80	0.15	0.05
Loss	$0	$10,000	$25,000

Calculate the expected value and standard deviation of Alderan’s losses for the year.

Assume that Alderan Toy Store pools losses with Dagobah Toy Store, which has an identical loss distribution. Dagobah’s losses are independent of Alderan’s. Alderan and Dagobah agree to split the total losses in the pool equally. Show the revised probability distribution for the mean loss from the pool.