Now suppose Ben owns a $600,000 house and has an 8% chance of experiencing a fire in any given year. Assume as before that the fire will result in a total loss. Suppose the Lemonade Insurance Company offers Rainie and Ben the same insurance contract and charges them the same premium. In other words, they put Rainie and Ben into the same risk pool. તે. What is the probability distribution of total losses for Lemonade Insurance Company if they sell contracts to Rainie and Ben? b. What premium must Lemonade Insurance Company charge each of Rainie and Ben if they want to 'break even'? C. Will Rainie purchase this contract if she is charged the 'break-even' premium? Will Ben purchase this contact if he is charged the 'break-even' premium? Briefly explain your reason. d. What is the amount of risk Lemonade Insurance Company faces if they sell contracts to both Rainie and Ben?

Now suppose Ben owns a $600,000 house and has an 8% chance of experiencing a fire in any given year. Assume as before that the fire will result in a total loss. Suppose the Lemonade Insurance Company offers Rainie and Ben the same insurance contract and charges them the same premium. In other words, they put Rainie and Ben into the same risk pool. તે. What is the probability distribution of total losses for Lemonade Insurance Company if they sell contracts to Rainie and Ben? b. What premium must Lemonade Insurance Company charge each of Rainie and Ben if they want to 'break even'? C. Will Rainie purchase this contract if she is charged the 'break-even' premium? Will Ben purchase this contact if he is charged the 'break-even' premium? Briefly explain your reason. d. What is the amount of risk Lemonade Insurance Company faces if they sell contracts to both Rainie and Ben?

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter5: Probability: An Introduction To Modeling Uncertainty

Section: Chapter Questions

Problem 17P: The probability distribution for damage claims paid by the Newton Automobile Insurance Company on...

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