The probability distribution for damage claims paid by the Newton Automobile Insurance Company on collision insurance follows. Payment (5) Probability 0.80 0.11 0.04 0.02 0.01 8,000 0.01 10,000 0.01 Use the expected collision payment to determine the collision insurance premium that would enable the company to break even 0 500 hy does the policyholder purchase a collision policy with this expected value? ne policyholder is concerned that an accident will result in a big repair bill if there the insurance-Select your answer against a large loss. 1,000 3,000 5,000 The insurance company charges an annual rate of $456 for the collision coverage. What is the expected value of the collision policy f a policyholder? (Hint: It is the expec me company minus the cost of coverage.) Enter negative values as negative numbers. Select your answer insurance coverage. So even though the policyholder has an exper
The probability distribution for damage claims paid by the Newton Automobile Insurance Company on collision insurance follows. Payment (5) Probability 0.80 0.11 0.04 0.02 0.01 8,000 0.01 10,000 0.01 Use the expected collision payment to determine the collision insurance premium that would enable the company to break even 0 500 hy does the policyholder purchase a collision policy with this expected value? ne policyholder is concerned that an accident will result in a big repair bill if there the insurance-Select your answer against a large loss. 1,000 3,000 5,000 The insurance company charges an annual rate of $456 for the collision coverage. What is the expected value of the collision policy f a policyholder? (Hint: It is the expec me company minus the cost of coverage.) Enter negative values as negative numbers. Select your answer insurance coverage. So even though the policyholder has an exper
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Transcribed Image Text:The probability distribution for damage claims paid by the Newton Automobile Insurance Company on collision insurance follows.
Payment ($)
Probability
0.80
0.11
0.04
0
500
1,000
3,000
5,000
8,000
10,000
0.01
. Use the expected collision payment to determine the collision insurance premium that would enable the company to break even
Why does the policyholder purchase a collision policy with this expected value?
The policyholder is concerned that an accident will result in a big repair bill if there
the insurance-Select your answer. against a large loss.
0.02
0.01
0.01
. The insurance company charges an annual rate of $456 for the collision coverage. What is the expected value of the collision policy for a policyholder? (Hint: It is the expecte
the company minus the cost of coverage.) Enter negative values as negative numbers.
Select your answer-
insurance coverage. So even though the policyholder has an expect
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