X is given in thousands, so payouts range from 0 to $3,000. Find the probability that a policy chosen at random will incur a loss between $2,500 and $3,000, i.e. P(2.5 < X < 3) (a) 0.9112 (b) 0.1898 (c) 0.2628 (d) 0.5264 (e) The solution cannot be found from the information given

X is given in thousands, so payouts range from 0 to $3,000. Find the probability that a policy chosen at random will incur a loss between $2,500 and $3,000, i.e. P(2.5 < X < 3) (a) 0.9112 (b) 0.1898 (c) 0.2628 (d) 0.5264 (e) The solution cannot be found from the information given

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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Consider the following. P(A) = 0.35 and P(B) = 0.4, and P(A and B) = 0.14 (a) What is P(A | B)? (Give your answer correct to two decimal places.) (b) What is P(B | A)? (Give your answer correct to two decimal places.) (c) Are A and B independent? O yes O no O cannot be determined
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3. Suppose Chelsea has the following utility function over sure wealth: v (y) = In y (a) Consider the lottery that yields the outcome $2 with probability and the outcome $8 with probability . What is Chelsea's certainty equivalent for this lottery? 2 3* (b) For the lottery in (b), how much would Chelsea pay to have her risk taken away? (c) What is Chelsea's probability premium at $25 for a lottery that could swing her wealth $20 up or down? What about $15 up or down?
Twenty percent of primary care doctors think their patients receive unnecessary medical care. If required, round your answer to four decimal places. (a) Suppose a sample of 300 primary care doctors was taken. Show the distribution of the sample proportion of doctors who think their patients receive unnecessary medical care. np = n(1-p) = E(p) = σ(p) = (b) Suppose a sample of 500 primary care doctors was taken. Show the distribution of the sample proportion of doctors who think their patients receive unnecessary medical care. np = n(1-p) = E(p) = σ(p) = (c) Suppose a sample of 1,000 primary care doctors was taken. Show the distribution of the sample proportion of doctors who think their patients receive unnecessary medical care. np = n(1-p) = E(p) = σ(p) = (d) In which of the preceding three cases, part (a) or part (b) or part (c), is the standard error of p…
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The Arrow-Pratt measures of absolute and relative risk aversion respectively describe the willingness of a consumers to risk a fixed amount of wealth or a fixed fraction of their wealth. This problem will demonstrate this by setting up a simple investment problem. Suppose that consumers begin with initial wealth Wo and may buy shares of a risky asset whose payoff per share is given by 2. (1 w/ prob. P, X = 1-1 w/ prob.1– p. Therefore buying { shares of the risky asset yields final wealth W = Wo +X. Suppose that each consumer may buy an unlimited number of shares, and seeks to maximize expected utility of final wealth max E[u(W)]. (a) Expand the consumer's expected utility maximization problem, and find the first order condition. (b) Let Cara be a consumer whose utility function exhibits constant absolute risk aver- sion UA(W) = 1– e-aW Find Cara's optimal number of shares and show that it does not depend on her starting wealth Wo-