NoRisk Insurance Company sold 50,000 renters insurance policies that pay coverage for $7,500 when a loss occurs. All insured risks are identical and independent and based on research have probability of loss equal to 6% and variance of loss equal to 0.04.

1. (3 points) What is the number and amount of claims that NoRisk Insurance can expect to pay?

2. (3 points) What premium do they have to charge per policy to cover only expected losses?

3. (5 points) What extra premium may they need to charge each policyholder to cover losses with 97.5% of certainty?