Question

TIIS UUusuom! 1 pt TUNCI 17:48 27 of 36 to complete This Test: 36 pts possible A 25 year old can purchase a one-year fe insurance policy for $10,000 at a cost of $100. Past history indicates that the probably of a person ong wwe 250.0017. Decomar's tapered gener policy O A 83 OB 170.000 OC 99.83 D. 117 ick to select your answer. %23 3 $ 4 % 5 8 7 Y T E W R

Answer 1

- If person dies Insurance company pays am Amount of $10,000 - The cost of Insurance policy ir $100 probability of a person dies at 95=0.0017 Now IF a person does not dier the gain of Insurance compuny is $100 ZF the person dies the guin will be - $ 9900 ($10,000 $100) Cand the probability of Person not dies I - 0.0017 0.9983 -- Expected value of gain E [p (death) x profit when it occures] + p [no decith) xpoo fit when it coccynier] 0.0017 6-9900) + 0.9983 (100) -16.83 + 99.83 83 Company's expected gain per policy=83 - Ans : Ans : [A. 83