The annual premium for a $5,000 insurance policy against the theft of a painting is $200. If the (empirical) probability that the painting will be stolen during the year is 0.02, what is your expected return from the insurance company if you take out this insurance?
The annual premium for a $5,000 insurance policy against the theft of a painting is $200. If the (empirical) probability that the painting will be stolen during the year is 0.02, what is your expected return from the insurance company if you take out this insurance?
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text:The annual premium for a $5,000 insurance policy against the theft of a painting is $200. If the (empirical) probability that the
painting will be stolen during the year is 0.02, what is your expected return from the insurance company if you take out
this insurance?
Let X be the random variable for the amount of money received from the insurance company in the given year.
E(X)= dollars
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