insurance company sells a one-year house insurance policy, which covers cost of rebuild only. For customers insuring a house of a particular size the annual premium is set at €250. If the risk occurs then the customer is paid €150000 towards the cost of rebuild. Let the random variable X represent the gain/loss made by the customer by taking out a policy of this type. If the probability of making a claim is 0.01 then X has the following probability distribution: X = x 149750 -250 P(X=x) 0.01 0.99
insurance company sells a one-year house insurance policy, which covers cost of rebuild only. For customers insuring a house of a particular size the annual premium is set at €250. If the risk occurs then the customer is paid €150000 towards the cost of rebuild. Let the random variable X represent the gain/loss made by the customer by taking out a policy of this type. If the probability of making a claim is 0.01 then X has the following probability distribution: X = x 149750 -250 P(X=x) 0.01 0.99
Holt Mcdougal Larson Pre-algebra: Student Edition 2012
1st Edition
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Chapter11: Data Analysis And Probability
Section11.8: Probabilities Of Disjoint And Overlapping Events
Problem 2C
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Question
An insurance company sells a one-year house insurance policy, which covers cost of rebuild only. For customers insuring a house of a particular size the annual premium is set at €250. If the risk occurs then the customer is paid €150000 towards the cost of rebuild.
Let the random variable X represent the gain/loss made by the customer by taking out a policy of this type. If the probability of making a claim is 0.01 then X has the following probability distribution:
X = x |
149750 |
-250 |
P(X=x) |
0.01 |
0.99 |
Calculate the expected profit/loss, μ = E(X), made by the customer by taking out a policy of this type. (to the nearest euro)
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