Based on historical data, an insurance company estimates that a particular customer has a 1.2% likelihood of having an accident in the next year, with the average insurance payout being $3500. If the company charges this customer an annual premium of $120, what is the company's expected value of this insurance policy?

MATLAB: An Introduction with Applications
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ISBN:9781119256830
Author:Amos Gilat
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Chapter1: Starting With Matlab
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Based on historical data, an insurance company estimates
that a particular customer has a 1.2% likelihood of having
an accident in the next year, with the average insurance
payout being $3500.
If the company charges this customer an annual premium
of $120, what is the company's expected value of this
insurance policy?
Transcribed Image Text:Based on historical data, an insurance company estimates that a particular customer has a 1.2% likelihood of having an accident in the next year, with the average insurance payout being $3500. If the company charges this customer an annual premium of $120, what is the company's expected value of this insurance policy?
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