Insurance An insurance policy costs $100 and will pay policyholders $10,000 if they
Chapter 15, Problem 22(choose chapter or problem)
Insurance An insurance policy costs $100 and will pay policyholders $10,000 if they suffer a major injury ( resulting in hospitalization) or $3000 if they suffer a minor injury (resulting in lost time from work). The company estimates that each year 1 in every 2000 policyholders may have a major injury, and 1 in 500 a minor injury only. a) Create a probability model for the profit on a policy. b) Whats the companys expected profit on this policy? c) Whats the standard deviation?
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