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(c) Calculate the standard deviation of the present value of profit on a single policy. (d) Now suppose that the office sells 1000 such annuities simultaneously to independent lives. Calculate the value of P such that the probability that the present value of the profit to the insurance company is positive is 96%.

(c) Calculate the standard deviation of the present value of profit on a single policy. (d) Now suppose that the office sells 1000 such annuities simultaneously to independent lives. Calculate the value of P such that the probability that the present value of the profit to the insurance company is positive is 96%.

A First Course in Probability (10th Edition)
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...
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show me the answer to the question 3 and 4, please

2. A life insurance company sells annuities to men aged exactly 60. Each policyholder pays a single net premium, P, and then receives an annuity of $30000 a year in arrear until death (so that the first annuity payment is on the 61st birthday). (a) Calculate P. (b) Calculate the probability that the present value of profit on a single policy is positive. (c) Calculate the standard deviation of the present value of profit on a single policy. (d) Now suppose that the office sells 1000 such annuities simultaneously to independent lives. Calculate the value of P such that the probability that the present value of the profit to the insurance company is positive is 96%.
Transcribed Image Text:2. A life insurance company sells annuities to men aged exactly 60. Each policyholder pays a single net premium, P, and then receives an annuity of $30000 a year in arrear until death (so that the first annuity payment is on the 61st birthday). (a) Calculate P. (b) Calculate the probability that the present value of profit on a single policy is positive. (c) Calculate the standard deviation of the present value of profit on a single policy. (d) Now suppose that the office sells 1000 such annuities simultaneously to independent lives. Calculate the value of P such that the probability that the present value of the profit to the insurance company is positive is 96%.
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