An investor is considering a $25,000 investment in a start-up company. She estimates that she has probability 0.05 of a $15,000loss, probability 0.15 of a $20,000 loss, probability 0.35 of a$35,000 profit, and probability 0.45 of breaking even (a profit of $0). What is the expected value of the profit? Select one: A. $16,000 B. $0 C. $19,750 D. $8500

An investor is considering a $25,000 investment in a start-up company. She estimates that she has probability 0.05 of a $15,000loss, probability 0.15 of a $20,000 loss, probability 0.35 of a$35,000 profit, and probability 0.45 of breaking even (a profit of $0). What is the expected value of the profit? Select one: A. $16,000 B. $0 C. $19,750 D. $8500

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...

See similar textbooks

Similar questions

Suppose a life insurance company sells a $230,000 one-year term life insurance policy to a 20-year-old female for $370.The probability that the female survives the year is 0.999464. Compute and interpret the expected value of this policy to the insurance company.
The probability that a 30-year-old male in the U.S. will die within one year is about 0.00142. An insurance company is preparing to sell a 30-year-old male a one-year, $45,000 life insurance policy. How much should it charge for its premium in order to have a positive expectation for the policy? (Round your answer to the nearest dollar.)
An insurance company sells a one year term life insurance policy to an 80 year old woman. The woman pays a premium of $1000. If she dies within one year, the company will pay $18,500 to her beneficiary. According to the company's statistics department, the probability that an 80 year old woman will be alibve one year later is 0.9581. Find the expected value of the insurance company's profit.
The probability that a 22-year-old female in the U.S. will die within one year is approximately 0.00044. If an insurance company sells a one-year, $20,000 life insurance policy to such a person for $295, what is the company's expectation? (Round your answer to the nearest dollar.)$
1000 raffle tickets were sold for $4 each. 2 prizes of $500 each, and 11 prizes of $100 each is to be awarded to winners. If Olga purchases one ticket, what is the expected value of her winnings? Round your answer to two decimal places (to the nearest cent).
Suppose a life insurance company sells a $230,000 one-year term life insurance policy to a 20-year-old female for$240. The probability that the female survives the year is 0.999463. Compute and interpret the expected value of this policy to the insurance company.
Suppose a life insurance company sells a $160,000 1-year term life insurance policy to a 20-year-old female for $330. According to the National Vital Statistics Report, 58(21), the probability that th female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company. The expected value is $. (Round to the nearest cent as needed.). Which of the following interpretations of the expected value is correct? Select the correct choice below and fill in the answer box to complete your choice. (Round to the nearest cent as needed.) OA. The insurance company expects to make a profit of $ OB. The insurance company expects to make a maximum profit of $ OC. The insurance company expects to make a minimum profit of $ OD. The insurance company expects to make a profit of $ ! 1 Q @ 2 W 3 E $ 4 R on every 20-year-old female it insures for 1 year. on every 20-year-old female it insures for 1 year. on every 20-year-old female it insures for 1 month. on…
An insurance company estimates the probability of an earthquake in the next year to be 0.0013. The average damage done by an earthquake is estimated to be $60,000. If the company offers earthquake insurance for $100, what is their expected value of the policy?
Suppose a life insurance company sells a $280,000 one-year term life insurance policy to a 24-year-old female for $180. The probability that the female survives the year is 0.999522. Compute and interpret the expected value of this policy to the insurance company.
There is a 0.9985 probability that a randomly selected 30-year-old male lives through the year. A life insurance company charges $191 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $120,000 as a death benefit. Complete parts (a) through (c) below.
The probability that a 80-year-old female in the U.S. will die within one year is about 0.048711. An insurance company is preparing to sell a 80-year-old female a one-year, $20,000 life insurance policy. How much should it charge for its premium in order to have a positive expectation for the policy? (Round your answer to the nearest dollar.)$