An insurance company estimates the following distribution of annual profits and losses for homeowner policies.Number ofClaims PerHouse4 or3.moreProbabilityProfit0.800.060.02$4000 -$1000 -$3000 -$10,000n/aWhat is the insurance company's expected profit per year?2.

Here profit is the X value, and probability is pi Total probability is always 1. So the blank…

Answered: An insurance company estimates the…

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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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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An insurance company estimates the following distribution of annual profits and losses for homeowner policies. Number of Claims Per House 4 or 3. more Probability Profit 0.80 0.06 0.02 $4000 -$1000 -$3000 -$10,000 n/a What is the insurance company's expected profit per year? 2.