Suppose you work for an insurance company, and you have the following information on policy holders: Policyholder outcome Payout X Probability P(X=x) Death 10,000 1/1000 Disability 5,000 2/1000 Neither 0 997/1000 How much can this insurance company expect to payout, on average, for his policy?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Suppose you work for an insurance company, and you have the following information on policy holders:
|
Policyholder outcome |
Payout X |
|
|
Death |
10,000 |
1/1000 |
|
Disability |
5,000 |
2/1000 |
|
Neither |
0 |
997/1000 |
How much can this insurance company expect to payout, on average, for his policy?
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