Answer f & g

Neighborhood Insurance sells fire insurance policies to local homeowners. The premium is $230, the probability of a fire is 01%, and in the event of a fire, the insured damages (the payout on the policy) will be $220,000. a. Make a table of the two possible payouts on each policy with the probability of each Answer is complete and correct. Outcome A: No Fire 230 Outcome B: Fire! $ (219 770) Payout b. Suppose you own the entire firm, and the company issues only one policy. What are the expected value, variance and standard deviation of your profit? Answer is complete and correct. Variance Expected Return 19 10 Standard Deviation 6954 48351600