Let X be the damage incurred (in $) in a certain type of accident during a given year. Possible X values are 0, 1,000, 5,000, and 10,000, with probabilities 0.84, 0.08, 0.06, and 0.02, respectively. A particular company offers a $500 deductible policy. If the company wishes its expected profit to be $100, what premium amount should it charge (in dollars)?

Let X be the damage incurred (in $) in a certain type of accident during a given year. Possible X values are 0, 1,000, 5,000, and 10,000, with probabilities 0.84, 0.08, 0.06, and 0.02, respectively. A particular company offers a $500 deductible policy. If the company wishes its expected profit to be $100, what premium amount should it charge (in dollars)?

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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