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An insurance policy sells for $1000. Based on pastdata, an average of 1 in 125 policyholders will file a $20,000 claim, an average of 1
An insurance policy sells for $1000. Based on pastdata, an average of 1 in 125 policyholders will file a $20,000 claim, an average of 1 in 100 policyholders will file a $50,000 claim, and an average of 1 in 400 policyholders will file an $80,000 claim. Find the expected value(to thecompany) per policy sold. If the company sells 20,000 policies, what is the expected profit orloss?
What is the expected value _____ ? (Simplify your answer)
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