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Let X be the amount in claims (in dollars) that a randomly chosen policyholder collects from an insurance company this year. The probability distribution function
Let X be the amount in claims (in dollars) that a randomly chosen policyholder collects from an insurance company this year. The probability distribution function of X is given below. X = claim amount 0 100 500 1000 Probability 0.80 0.07 0.10 0.03 Let $D be the expected value of X. Which of the following is a correct interpretation of this value? We would expect a randomly chosen policyholder to collect $D in claims this year. If we were to observe a large number of policyholders, the average amount claimed would be around $D. The most likely value for the amount in claims is $D. On average, the amount claimed is about $D away from the mean
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