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An insurance company writes a policy to the effect that an amount of money A must be paid if at least one of the events
An insurance company writes a policy to the effect that an amount of money A must be paid if at least one of the events E and F occur within a year. If the company estimates that E will occur within a year with probability p, F with probability q, and both E and F with probability r, what should the company charge the customer in order that its expected profit will be 10 percent of A?
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