An automobile insurance company is offering a policy such that in the event of an accident, they will pay $22,000 to replace a vehicle for an annual premium of $1,450 per year. Suppose there is a 8.00% of policy holders being in an accident this year.

For all of the numerical questions below, express your answer in 2 decimal places and exclude all non-numerical characters (e.g. $ % , ). Also, express the negative amounts by a minus sign (e.g. -10)

A) What is the net amount the insurance company will pay after receiving the premium if a customer is in an accident? Express the amount as a negative number.

B) What is the amount the insurance company will receive if the customer is not in an accident?

Answer: Answer

C) What is the expected value of the insurance policy?

Answer: Answer

D) What is the standard deviation of the insurance policy?

Answer: Answer

E) Can we expect this to be a good policy for the insurance company if we assume that the company has no additional costs to enforce this insurance contract?

Yes, the insurance company on average will earn a profit on these insurance policies given the accident rate. Yes, the standard deviation indicates that this is not a risky policy. No the insurance company on average will make a loss on these insurance policies given the accident rate. No, the standard deviation indicates that this is a risky policy. Not enough information to answer this question.