2. Pinnacle Transportation Corp (PTC) is a limousine service and uses a fleet of 1,000 vehicles to provide limousine and party bus services.From past information, the Chief Risk Officer for PTC has constructed the following loss distribution for the number of accidents per vehicle per year.Hint: frequency.

# of accidents per vehicle per year # of vehicles having these losses

0 300

1 500

2 200

Find the expected number of accidents per vehicle per year, i.e. calculate the E(F).

(3 points)

3. Now assume from past information, PTC has constructed the following probability distribution (PD) for the dollar amount of loss when accidents do occur.Hint: severity.

$ amount of losses Probability of dollar losses

2,000 .40

8,000 .35

15,000 .25

a. Find the expected cost per accident, i.e., calculate the E(S).(3 points)

b. Calculate the expected loss per vehicle per year.(3 points)

c. Calculate the expected loss for all vehicles per year.(3 points)