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An insurance company sells a policy for $1250. Based on past data, an average of 1...

An insurance company sells a policy for $1250.
Based on past data,
an average of 1 in 50 policyholders will win a $10,000 claim on a policy,
an average of 1 in 100 policyholders will win a $25,000 claim on a policy,
an average of 1 in 200 policyholders will win a $50,000 claim on a policy, and
an average of 1 in 500 policyholders will win a $250,000 claim on a policy.
a. Find the expected value (to the company) per policy sold.
b. If the company sells 10,000 policies, what is the expected total profit or loss for the company?
math   Statistics-And-Probability   
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Answer #1

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