Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Applied Quantitative Finance

Authors: W.; T. Kleinkow; G. Stahl Hardle

1st Edition

3540434607, 978-3540434603

More Books

Students also viewed these Finance questions