Amount of Loss (X) Probability of Loss P(X)

$ 0 .30

$720 .50

$1,200 .20

Consider a second probability of loss distribution:

Amount of Loss (X) Probability of Loss P(X)

$450 .40

$700 .60

1) Please determine the mean or expected loss for the above two distributions.

In order to determine the riskier distribution, two standard measures of dispersion

are employed to characterize the variability or dispersion about the mean value.

2) Please compute variance and standard deviation for both distributions above and

identify the riskier distribution comparing their standard deviations.