Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest to Moria. Based on past experience, the probability of surviving such a quest is 86.5%. If BIC charges a premium of 7,905 silver coins and would pay a death benefit of 94,701 silver coins if the insured were to die, what is the expected value of this insurance policy to BIC?

Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest to Moria. Based on past experience, the probability of surviving such a quest is 86.5%. If BIC charges a premium of 7,905 silver coins and would pay a death benefit of 94,701 silver coins if the insured were to die, what is the expected value of this insurance policy to BIC?

Name: Brandybuck Insurance Company (BIC) is deciding whether to insure the l
Uploaded: 2024-03-20T07:06:41.000Z
Channel: Bartleby
Description: Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest to Moria. Based on past experience, the probability of surviving such a quest is 86.5%. If BIC charges a premium of 7,905 silver coins and would pay

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

Related questions

Q: Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest…

A: It is needed to find the expected value of this insurance policy to the company.

Q: A raffle offers a first prize of $1000, 2 second prizes of$300 each, and 20 third prizes of $10…

A: Given: A raffle offers a first prize of $1000, 2-second prizes of $300 each, and 20 third prizes of…

Q: If 10% of the time Danny makes guacamole twice a month, 35% of the time he makes guacamole once a…

A: Using the given information we make a table Number of times (xi) 2 1 0 probability (pi)…

Q: Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest…

Q: There is a 0.9989 probability that a randomly selected 28-year-old male lives through the year. A…

A: We have to find given probability.

Q: If the company wants to offer a 2 year extended warranty, what price should they charge so that…

A: A company that makes computers estimates that 2% of their hard drives will fail after the original…

Q: There is a 0.9988 probability that a randomly selected 28 -year-old male lives through the year. A…

A: Expected value:The expected value of a discrete random variable X is defined as the sum of the…

Q: If the famous insurance company, Brendan's of Jacksonville, insures a $3 million Monet painting for…

A: In the given case there are two possibilities The claim will arrive if painting gets stolen and the…

Q: A company estimates that 0.1% of their products will fail after the original warranty period but…

A: Given that: The percentage of product fail = 0.1 % = 0.001 Replacement cost = $ 200 Now, here…

Q: A certain type of bond pays an interest rate of 5%, but if it defaults, you lose the total value of…

A: The interest in a bond is 5%. The prob. that the bond default is 1%. The amount invested is $100.…

Q: There is a 0.9983 probability that a randomly selected 27-year-old male lives through the year. A…

A: Given, there is a 0.9983 probability that a randomly selected 27-year old male lives the year…

Q: There is a 0.9984 probability that a randomly selected 29-year-old male lives through the year. A…

Q: A company estimates that 0.7% of their products will fail after the original warranty period but…

Q: An insurance company sells policies for $1,000 each. Based on historical data, an average of 1 in…

A: Introduction: Insurance is an agreement defined by a scheme under which a person or agency receives…

Q: Jim likes to day-trade on the Internet. On a good day, he averages a $1400 gain. On a bad day, he…

A: On a good day, Jim averages a $1400 gain. On a bad day, Jim averages a $700 loss.Percentage of time…

Q: raveller bought travel insurance for a five day trip. The policy will pay a benefit 5000 for…

A: Binomial distribution has used to find out the expected benefit for this trip.

Q: An insurance policy sells for $600. Based on past data, an average of 1 in 50 policyholders will…

Q: There is a 0.9987 probability that a randomly selected 32 year-old male lives through the year. A…

Q: Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest…

A: Final answer is: 5446 silver coins

Q: There is a 0.9984 probability that a randomly selected 27-year-old male lives through the year. A…

A: The probability that a randomly selected 27-year-old male survives is given by P(survive) = 0.9984…

Q: Your partner flips a fair coin. If the coin comes up heads, you pay him 2; if the coin comes up…

Q: A company estimates that 0.85% of their products will fail after the original warranty period but…

Q: There is a 0.9982 probability that a randomly selected 27-year-old male lives through the year. A…

A: The probability that the randomly selected 27-year-old male lives through the yearThe amount of…

Q: Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest…

A: Given: BIC charges a premium = 6591 silver coins. BIC pay a death benefit = 47460 The probability of…

Q: Sam is applying for a single year life insurance policy worth $71,300.00. If the actuarial tables…

A: x P(x) xP(x) -358 0.99 -354.42 70942 0.01 709.42

Q: A $2600 cash prize is to be awarded at a carnival. If 1300 tickets are sold for $3 each, what is the…

Q: Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest…

A: From the given information, the probability of surviving such a quest is 94.0% and the probability…

Q: Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest…

A: Formula : Expected value = ∑xP(x)

Q: Your school is selling raffle tickets as a fundraiser. They sell tickets for $5 each, there are 10…

Q: John and Larry are fundraisers for UNO. A wealthy benefactor says that he will match whatever John…

Q: If BIC charge

Q: A company estimates that 0.8% of their products will fail after the original warranty period but…

A: The proportion of products estimated by the company for failing after the warranty original period…

Q: Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest…

A: Use the given information to obtain the expected value of this insurance policy to BIC.

Concept explainers

Contingency Table

A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.

Binomial Distribution

Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.

Topic Video

Question

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

$Discrete Probability Distributions$

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, probability and related others by exploring similar questions and additional content below.

Similar questions

A customer has approached a bank for a $100,000 one-year loan at an 8% interest rate. If the bank does not approve this loan application, the $100,000 will be invested in bonds that earn a 6% annual return. Withoutadditional information, the bank believes that there is a 4% chance that this customer will default on the loan, assuming that the loan is approved. If the customer defaults on the loan, the bank will lose $100,000. At a cost of $1000, the bank can thoroughly investigate the customer’s credit record and supply a favorable or unfavorable recommendation. Past experience indicates that the probability of a favorable recommendation for a customer who will eventually not default is 0.80, and the chance of a favorable recommendation for a customer who will eventually default is 0.15.a. Use a decision tree to find the strategy the bank should follow to maximize its expected profit.b. Calculate and interpret the expected value of information (EVI) for this decision problem.c.…
Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest to Moria. Based on past experience, the probability of surviving such a quest is 80.6%. If BIC charges a premium of 8,499 silver coins and would pay a death benefit of 52,297 silver coins if the insured were to die, what is the expected value of this insurance policy to BIC?
A company estimates that 0.7% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $50.If they offer a 2 year extended warranty for $4, what is the company's expected value of each warranty sold?
If the famous insurance company, Lloyd’s of London, insures a $3 million Monet painting for $5000 per year. And, in each year, the painting has a .00021 chance of being stolen according to the Lloyd’s research team? From Lloyd’s perspective, find the expectation for insuring this painting for one year
There is a 0.9984 probability that a randomly selected 31-year-old male lives through the year. A life insurance company charges $159 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $80,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 31-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is $ The value corresponding to not surviving the year is $ (Type integers or decimals. Do not round.)
Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest to Moria. Based on past experience, the probability of surviving such a quest is 88.5%. If BIC charges a premium of 9,970 silver coins and would pay a death benefit of 78,065 silver coins if the insured were to die, what is the expected value of this insurance policy to BIC? Round to the nearest silver coin as needed. If the expected value is a loss to BIC, enter your answer as a negative mumber.
A company estimates that 0.6% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $400. If they offer a 2 year extended warranty for $42, what is the company's expected value of each warranty sold?
There is a 0.9985 probability that a randomly selected 33 year old male lives through the year. A life insurance company charges $155 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit. From the perspective of the 33 year old male, what are the monetary values corresponding to the two events of surviving the year and not surviving?
Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest to Moria. Based on past experience, the probability of surviving such a quest is 88.9%. If BIC charges a premium of 8,240 silver coins and would pay a death benefit of 56,881 silver coins if the insured were to die, what is the expected value of this insurance policy to BIC? Round to the nearest silver coin as needed. If the expected value is a loss to BIC, enter your answer as a negative number. Phil Dunphy, a real estate agent, is considering whether he should list an unusual $303,402 house for sale. If he lists it, he will need to spend $3,848 in advertising, staging, and fresh cookies. The current owner has given Phil 6 months to sell the house. If he sells it, he will receive a commission of $23,557. If he is unable to sell the house, he will lose the listing and his expenses. Phil estimates the probability of selling this house in 6 months to be 73%. What is the expected…
2. If an insurance company issues a $200,000 five-year policy on a man whose probability of living for another five years is .994, what is the minimum that the expected cost to the company for this policy?
Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest to Moria. Based on past experience, the probability of surviving such a quest is 95.5%. If BIC charges a premium of 9,900 silver coins and would pay a death benefit of 49,518 silver coins if the insured were to die, what is the expected value of this insurance policy to BIC? Round to the nearest silver coin as needed. If the expected value is a loss to BIC, enter your answer as a negative number.