Answered: Amount of claim (to nearest $20,000)…

Amount of claim (to nearest $20,000) Probability $0 0.70 $20,000 0.17 $40,000 0.06 $60,000 0.04 $80,000 0.02 $100,000 0.01

College Algebra (MindTap Course List)

12th Edition

ISBN:9781305652231

Author:R. David Gustafson, Jeff Hughes

Publisher:R. David Gustafson, Jeff Hughes

Chapter8: Sequences, Series, And Probability

Section8.CR: Chapter Review

Problem 37E: Find the positive geometric mean between 4 and 64.

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Question

Amount of claim (to nearest $20,000)	Probability
$0	0.70
$20,000	0.17
$40,000	0.06
$60,000	0.04
$80,000	0.02
$100,000	0.01

A. Calculate the expected value?

B. How much should the company charge as an average premium so that it breaks even on its claim costs?

C. How much should the company charge to make a profit of $50 per policy?

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