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 99.4%. If BIC charges a premium of 5,920 silver coins and would pay a death benefit of 78,967 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 99.4%. If BIC charges a premium of 5,920 silver coins and would pay a death benefit of 78,967 silver coins if the insured were to die, what is the expected value of this insurance policy to BIC?
Chapter8: Sequences, Series,and Probability
Section: Chapter Questions
Problem 41CT: On a game show, a contestant is given the digits 3, 4, and 5 to arrange in the proper order to form...
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Transcribed Image Text: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 99.4%. If BIC charges a premium of 5,920 silver
coins and would pay a death benefit of 78,967 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.
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