Insurance company. An insurance company estimates that it should make an annual profit of $150 on each homeowner’s policy written, with a standard deviation of

$6000.

a) Why is the standard deviation so large?

b) If the company writes only two of these policies, what are the mean and standard deviation of the annual profit?

c) If the company writes 1000 of these policies, what are the mean and standard deviation of the annual profit?

d) What circumstances could violate the assumption of independence of the policies?