There is a 0.9988 probability that a randomly selected 31-year-old male lives through the year. A life insurance company charges $195 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $110,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 31-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 $ The value corresponding to not surviving the year is $ (Type integers or decimals. Do not round.) b. If the 31-year-old male purchases the policy, what is his expected value? The expected value is $ (Round to the nearest cent as needed.) c. Can the insurance company expect to make a profit from many such policies? Why?

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There is a 0.9988 probability that a randomly selected 31-year-old male lives through the year. A life insurance
company charges $195 for insuring that the male will live through the year. If the male does not survive the year, the
policy pays out $110,000 as a death benefit. Complete parts (a) through (c) below.
a. From the perspective of the 31-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 $
The value corresponding to not surviving the year is $
(Type integers or decimals. Do not round.)
b. If the 31-year-old male purchases the policy, what is his expected value?
The expected value is $
(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 31-year-old male it
insures for 1 year.
(Round to the nearest cent as needed.)
Transcribed Image Text:There is a 0.9988 probability that a randomly selected 31-year-old male lives through the year. A life insurance company charges $195 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $110,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 31-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 $ The value corresponding to not surviving the year is $ (Type integers or decimals. Do not round.) b. If the 31-year-old male purchases the policy, what is his expected value? The expected value is $ (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 31-year-old male it insures for 1 year. (Round to the nearest cent as needed.)
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