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Avicenna, an insurance company, offers five-year commercial property insurance policies to small businesses. If the holder of one of these policies experiences property damage in the next five years, the company must pay out  $26,500  to the policy holder. Executives at Avicenna are considering offering these policies for  $497  each. Suppose that for each holder of a policy there is a  2%  chance they will experience property damage in the next five years and a  98%  chance they 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 expect to 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 paid out to the holder.   Avicenna can expect to make money from offering these policies.   In the long run, they should expect to makedollars on each policy sold.   Avicenna can expect to lose money from offering these policies.   In the long run, they should expect to losedollars on each policy sold   Avicenna should expect to neither make nor lose money from offering these policies.

Avicenna, an insurance company, offers five-year commercial property insurance policies to small businesses. If the holder of one of these policies experiences property damage in the next five years, the company must pay out  $26,500  to the policy holder. Executives at Avicenna are considering offering these policies for  $497  each. Suppose that for each holder of a policy there is a  2%  chance they will experience property damage in the next five years and a  98%  chance they 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 expect to 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 paid out to the holder.   Avicenna can expect to make money from offering these policies.   In the long run, they should expect to makedollars on each policy sold.   Avicenna can expect to lose money from offering these policies.   In the long run, they should expect to losedollars on each policy sold   Avicenna should expect to neither make nor lose money from offering these policies.

MATLAB: An Introduction with Applications
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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Avicenna, an insurance company, offers five-year commercial property insurance policies to small businesses. If the holder of one of these policies experiences property damage in the next five years, the company must pay out 
$26,500
 to the policy holder. Executives at Avicenna are considering offering these policies for 
$497
 each. Suppose that for each holder of a policy there is a 
2%
 chance they will experience property damage in the next five years and a 
98%
 chance they 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 expect to 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 paid out to the holder.
 
Avicenna can expect to make money from offering these policies.
 
In the long run, they should expect to makedollars on each policy sold.
 
Avicenna can expect to lose money from offering these policies.
 
In the long run, they should expect to losedollars on each policy sold
 
Avicenna should expect to neither make nor lose money from offering these policies.
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