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A University plans to start an insurance company to insure students' risk of personal property loss. Assume that each student's loss distribution has a mean
A University plans to start an insurance company to insure students' risk of personal property loss. Assume that each student's loss distribution has a mean of $200 and a standard deviation of $100 and that the students' distributions are uncorrelated. Assume further that the insurance will be mandatory for all students. If the University starts out with $0 capital and charges each student a premium of $365, what is the probability of insolvency during the first year? A. Cannot determine: not enough information B. 50% C. 5% D. 1%
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