An insurance policy costs $110 and will pay policyholders $8,000 if they suffer a major injury (resulting in hospitalization) or $3500 if they suffer a minor injury (resulting in lost time from work). The company estimates that 1 in every 2093 policyholders will suffer a major injury and that 1 in 492 will suffer a minor injury. a) Create a probability model for the profit on a policy. b) What's the company's expected profit on the policy? c) What's the standard deviation? a) First find the probability and profit for each outcome. P(event) Profit no injury major injury minor injury (Round to six decimal places as needed.)
An insurance policy costs $110 and will pay policyholders $8,000 if they suffer a major injury (resulting in hospitalization) or $3500 if they suffer a minor injury (resulting in lost time from work). The company estimates that 1 in every 2093 policyholders will suffer a major injury and that 1 in 492 will suffer a minor injury. a) Create a probability model for the profit on a policy. b) What's the company's expected profit on the policy? c) What's the standard deviation? a) First find the probability and profit for each outcome. P(event) Profit no injury major injury minor injury (Round to six decimal places as needed.)
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:An insurance policy costs $110 and will pay policyholders $8,000 if they suffer a major injury (resulting in hospitalization) or $3500 if they suffer a minor injury
(resulting in lost time from work). The company estimates that 1 in every 2093 policyholders will suffer a major injury and that 1 in 492 will suffer a minor injury.
a) Create a probability model for the profit on a policy.
b) What's the company's expected profit on the policy?
c) What's the standard deviation?
a) First find the probability and profit for each outcome.
P(event)
Profit
no injury
major injury
minor injury
(Round to six decimal places as needed.)
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