John believes he faces health costs in the current year of either $2,000 dollars with a probability

0.9 or $12,000 with a probability 0.1.

a- He can purchase a complete insurance for $4,000. Is the premium actuarily fair

b- John obtains a major medical and hospital policy that covers all costs, aside from a 600

deductible and 10% coinsurance rate. If John actually incurs annual health charges of $4,000

dollars by how much the health insurance company will reimburse him? [2.5 marks]