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# Assume that an insurance company knows the following

ISBN: 9780321923271 41

## Solution for problem 4E Chapter 1.5

Probability and Statistical Inference | 9th Edition

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Problem 4E

PROBLEM 4E

Assume that an insurance company knows the following probabilities relating to automobile accidents (where the second column refers to the probability that the policyholder has at least one accident during the annual policy period):

A randomly selected driver from the company’s insured drivers has an accident. What is the conditional probability that the driver is in the 16–25 age group?

Step-by-Step Solution:

Step 1:

The probabilities relating to automobile accidents is given by an insurance company.

 Age of drivers Probabilities of accidents Fraction of company’s insured drivers. 16-15 0.05 0.10 26-50 0.02 0.55 51-65 0.03 0.20 66-90 0.04 0.15

If a randomly selected driver from the company’s insured drivers has an accident. We have to find   the conditional probability that the driver is in the 16–25 age group.

Step 2 of 2

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