Illustration 32.The publishing company's estimate of profits and losses and theirrespective probabilities on the publication of this book during the first yerare as follows :Profit/LossProbabilityCondition500000.20If successfulIf moderate200000.30If unsuccessful-100000.50Find the expected value of the profit of the company for this book during thefirst year.

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Answered: The publishing company's estimate of…

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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A concession stand at a pool tends to get $500 in profit on hot days, $300 on average days, and $200 on cool days. If it is hot 39% of the time, average 47% of the time, and cool 14% of the time, what is the expected value of their profit? Please round to the nearest whole dollar. Profit = Please express your answer as a whole number without any decimals or any other symbols. On a particular type of property insurance policy, about 1 in every 5,000 policies a year tend to make a sizable claim (in other words, a probability of 0.02%, or 0.0002). The claims tend to average about s110000. What would be a fair rate on this policy (before adjusting to cover operating costs)? Please round to the nearest whole dollar. Fair price = $ Please enter only digits into the box. Do not include dollar signs, commas, or any other symbols
A certain model phone costs $599. The probability of the phone breaking over the course of a year is .07. What is the maximum amount you could pay for phone replacement insurance and still have a non-negative expected value on the policy? In other words, for what price or below would it be worth it to get the insurance?
Find the following probabilities. You MUST draw, label, and shade a curve for each one. Use the table to complete each probability and state the probability to be unusual if it is less than 0.05 or 5%. A. The area to the left of z = -0.97 and to the right of z = 0.97. B. P(-1.76 < z < 0.34)
3. What would be the yearly premium for a $50,000 insurance policy against accidental household flood if the likelihood of an accidental household flood is estimated to be 0.005 and the company wishes to have a yearly expected gain of $2000? a. $2, 250. b. $2,550. c. $2,500. d. $2,520. 4. A manufacturer of electronic equipment buys spare parts for replacement and repairs in lots of one-thousand from the supplier. The manufacturer uses these spare parts to fix items under warrantee. Past historical records show that the probability of any one spare part being defective is unlikely and assumed to be one in one-thousand. In a shipment of one-thousand spare parts the probability of two defectives is a. 0.148. b. 0.184. c. 0.366. d. 0.386. 5. What is the probability of getting exactly three heads in five flips of a balance coin? a. 5/16 b. 3/16 c. 7/16 d. 9/16
The probability that a 29-year old female will die within 1-year is 0.000594. If an insurance company sells a 1-year, $50000 life insurance policy to a 29-year old female for $77, what is the expected value for the insurance company? Round your answer to the nearest cent.
Q3. Suppose that the market default rate for bonds is given by 0.01, i.e., the probability the market believes that the company may not be able to pay the owner of the bonds is 0.01. Now a credit default swap (CDS) is sold at fair price $ 0.01 per unit. Ackman expects that the true default rate is 0.05, not 0.01. Ackman bought 67 billion units of CDS at the price $ 0.01 per unit. a. Suppose that Ackeman's expectation about the default rate is not correct. I.e., the true default rate for bonds is given by 0.01. Find the cost of the purchase. Find the expected payoff. Find the profit. b. Suppose that Ackeman's expectation is correct. Find the cost of the purchase. Find the expected payoff. Find the profit.
An insurance company sells a one year term life insurance policy to an 80 year old woman. The woman pays a premium of $1000. If she dies within one year, the company will pay $18,500 to her beneficiary. According to the company's statistics department, the probability that an 80 year old woman will be alibve one year later is 0.9581. Find the expected value of the insurance company's profit.
An insurance policy on an electrical device pays a benefit of $2400 if the device fails during the first year. The amount of the benefit decreases by $800 each successive year until it reaches 0 . If the device has not failed by the beginning of any given year, the probability of failure during that year is 0.29.Find the expected benefit under this policy.

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