An insurance company sells a policy for $5000. There is a 3 in 20 probability that the insurance company will have to pay $10,000 claim, a 1 in 100 probability that the insurance company will have to pay a $25,000 claim, and 1 in 500 probability that the insurance company will have to pay a $200,000 claim. What is the expected value to the insurance company of each policy it sells?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
An insurance company sells a policy for $5000. There is a 3 in 20
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