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A home insurance company anticipates the following pattern of claims, based on historical data. What is the expected claim on the next policy sold by
A home insurance company anticipates the following pattern of claims, based on historical data. What is the expected claim on the next policy sold by the company?
Type of Claim | Size of claim | Number of claims out of 10,000 Policy holders | Probability |
1 | $200000 | 1 | .0001 |
2 | $50000 | 10 | .001 |
3 | $2000 | 200 | .02 |
4 | $0 | 9789 | .9789 |
A) $100
B) $110
C) $120
D) $130
E) $140
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