Homework Help is Here – Start Your Trial Now!
Business
Finance
There is a 0.0087 probability that a randomly selected 27-year-old male lives through the year. A life insurance company charges $150 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out s00,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 27-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is s. The value corresponding to not surviving the yea i (Type integers or decimals. Do not round.) b. If the 27-year-old male purchases the policy, what is his expected value? The expected value is sO (Round to the nearest cent as needed.) o. Can the insurance company expect to make a profit from many such policies? Why? because the insurance company expects to make an average profit of $ on every 27-year-old male it insures for 1 year. (Round to the nearest cent as needed.)

There is a 0.0087 probability that a randomly selected 27-year-old male lives through the year. A life insurance company charges $150 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out s00,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 27-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is s. The value corresponding to not surviving the yea i (Type integers or decimals. Do not round.) b. If the 27-year-old male purchases the policy, what is his expected value? The expected value is sO (Round to the nearest cent as needed.) o. Can the insurance company expect to make a profit from many such policies? Why? because the insurance company expects to make an average profit of $ on every 27-year-old male it insures for 1 year. (Round to the nearest cent as needed.)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question

Would you help me with this problem. Thank you

There is a 0.9987 probability that a randomly selected 27-year-old male lives through the year. A life insurance company charges $159 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out s90,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 27-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is S The value corresponding to not surviving the year is S (Type integers or decimals. Do not round.) b. If the 27-year-old male purchases the policy, what is his expected value? The expected value is S- (Round to the nearest cent as needed.) c. Can the insurance company expect to make a profit from many such policies? Why? because the insurance company expects to make an average profit of $ on every 27-year-old male it insures for 1 year. (Round to the nearest cent as needed.)
Transcribed Image Text:There is a 0.9987 probability that a randomly selected 27-year-old male lives through the year. A life insurance company charges $159 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out s90,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 27-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is S The value corresponding to not surviving the year is S (Type integers or decimals. Do not round.) b. If the 27-year-old male purchases the policy, what is his expected value? The expected value is S- (Round to the nearest cent as needed.) c. Can the insurance company expect to make a profit from many such policies? Why? because the insurance company expects to make an average profit of $ on every 27-year-old male it insures for 1 year. (Round to the nearest cent as needed.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Industry Specific Activities
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS