Suppose a life insurance company sells a $190,000 1-year term life insurance policy to a 20-year-old female for $300. According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company. The expected value is $. (Round to the nearest cent as needed.)

MATLAB: An Introduction with Applications
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Suppose a life insurance company sells a $190,000 1-year term life insurance policy to a 20-year-old female for $300. According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544.
Compute and interpret the expected value of this policy to the insurance company.
The expected value is $
(Round to the nearest cent as needed.)
Transcribed Image Text:Suppose a life insurance company sells a $190,000 1-year term life insurance policy to a 20-year-old female for $300. According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company. The expected value is $ (Round to the nearest cent as needed.)
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Follow-up Question
Suppose a life insurance company sells a $190,000 1-year term life insurance policy to a 20-year-old female
for $300. According to the National Vital Statistics Report, 58(21), the probability that the female survives
the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company.
The expected value is $ 213.36.
(Round to the nearest cent as needed.)
Which of the following interpretations of the expected value is correct? Select the correct choice below and
fill in the answer box to complete your choice.
(Round to the nearest cent as needed.)
OA. The insurance company expects to make a profit of $
OB. The insurance company expects to make a profit of $
on every 20-year-old female it insures for 1 month.
on every 20-year-old female it insures for 1 year.
O C.
The insurance company expects to make a minimum profit of $ on every 20-year-old female it insures for
1 month.
O D.
The insurance company expects to make a maximum profit of $ on every 20-year-old female it insures for
1 year.
Transcribed Image Text:Suppose a life insurance company sells a $190,000 1-year term life insurance policy to a 20-year-old female for $300. According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is 0.999544. Compute and interpret the expected value of this policy to the insurance company. The expected value is $ 213.36. (Round to the nearest cent as needed.) Which of the following interpretations of the expected value is correct? Select the correct choice below and fill in the answer box to complete your choice. (Round to the nearest cent as needed.) OA. The insurance company expects to make a profit of $ OB. The insurance company expects to make a profit of $ on every 20-year-old female it insures for 1 month. on every 20-year-old female it insures for 1 year. O C. The insurance company expects to make a minimum profit of $ on every 20-year-old female it insures for 1 month. O D. The insurance company expects to make a maximum profit of $ on every 20-year-old female it insures for 1 year.
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