Avicenna, an insurance company, offers five-year commercial property insurance policies to small businesses. If the holder of one of these policies experiencesproperty damage in the next five years, the company must pay out $23,600 to the policy holder. Executives at Avicenna are considering offering these policiesfor $791 each. Suppose that for each holder of a policy there is a 3% chance they will experience property damage in the next five years and a 97% chancethey will not.(If necessary, consult a list of formulas.)If the executives at Avicenna know that they will sell many of these policies, should they expectto make or lose money from offering them? How much?To answer, take into account the price of the policy and the expected value of the amount paidout to the holder.O Avicenna can expect to make money from offering these policies.In the long run, they should expect to makedollars on each policy sold.O Avicenna can expect to lose money from offering these policies.In the long run, they should expect to lose dollars on each policy sold.O Avicenna should expect to neither make nor lose money from offering these policies.XS

The company will provide $23,600 to the policyholder if he experiences property damage.Policy price…

Answered: Avicenna, an insurance company, offers…

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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