Concept explainers
a.
To explain: The reason of selling insurance is not risky
a.
Answer to Problem 18E
Because large number of risk holders are involved.
Explanation of Solution
Given:
Gain is $1250.
Amount lost in case of death is $100,000
Calculation:
The expected value can be computed as:
Thus, the expected value is $303.35 per policy.
Risk is low because large number of policy holders are involved.
b.
To find: The standard deviation of Y.
b.
Answer to Problem 18E
The standard deviation is $9708
Explanation of Solution
Calculation:
The standard deviation of Y can be calculated as:
Thus, the standard deviation is $9708.
Chapter 6 Solutions
The Practice of Statistics for AP - 4th Edition
Additional Math Textbook Solutions
Intro Stats, Books a la Carte Edition (5th Edition)
Basic Business Statistics, Student Value Edition
Introductory Statistics (2nd Edition)
Essentials of Statistics (6th Edition)
Introductory Statistics (10th Edition)
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