An insurer offers a health plan to the employees of a large company. As part of this plan, the individual employ- ees may choose exactly two of the supplementary coverages A, B, and C, or they may choose no supplementary coverage. The proportions of the company’s employees that choose coverages A, B, and C are 1/4, 1/3, and 5/12, respectively. Determine the probability that a randomly chosen employee will choose no supplementary coverage. Choose one of the following. (Hint: Draw a Venn diagram with three sets, and let x = P1A ̈ B2. Use the fact that 4 of the 8 regions in the Venn diagram have a probability of 0.) Source: Society of Actuaries. a. 0 b. 47/144 c. 1/2 d. 97/144 e. 7/9
Compound Probability
Compound probability can be defined as the probability of the two events which are independent. It can be defined as the multiplication of the probability of two events that are not dependent.
Tree diagram
Probability theory is a branch of mathematics that deals with the subject of probability. Although there are many different concepts of probability, probability theory expresses the definition mathematically through a series of axioms. Usually, these axioms express probability in terms of a probability space, which assigns a measure with values ranging from 0 to 1 to a set of outcomes known as the sample space. An event is a subset of these outcomes that is described.
Conditional Probability
By definition, the term probability is expressed as a part of mathematics where the chance of an event that may either occur or not is evaluated and expressed in numerical terms. The range of the value within which probability can be expressed is between 0 and 1. The higher the chance of an event occurring, the closer is its value to be 1. If the probability of an event is 1, it means that the event will happen under all considered circumstances. Similarly, if the probability is exactly 0, then no matter the situation, the event will never occur.
An insurer offers a health plan to the employees of a large company. As part of this plan, the individual employ- ees may choose exactly two of the supplementary coverages A, B, and C, or they may choose no supplementary coverage. The proportions of the company’s employees that choose coverages A, B, and C are 1/4, 1/3, and 5/12, respectively. Determine the probability that a randomly chosen employee will choose no supplementary coverage. Choose one of the following. (Hint: Draw a Venn diagram with three sets, and let x = P1A ̈ B2. Use the fact that 4 of the 8 regions in the Venn diagram have a probability of 0.) Source: Society of Actuaries.
a. 0
b. 47/144
c. 1/2
d. 97/144
e. 7/9
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
