Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

There is a 0.9985 probability that a randomly selected 33-year-old male lives through the year. A life insurance company charges $199 for insuring that

image text in transcribed

There is a 0.9985 probability that a randomly selected 33-year-old male lives through the year. A life insurance company charges $199 for insuring that the male will live through the year. If the mal does not survive the year, the policy pays out $120,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 33-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is $ The value corresponding to not surviving the year is $ (Type integers or decimals. Do not round.) b. If the 33-year-old male purchases the policy, what is his expected value? The expected value is $ (Round to the nearest cent as needed.) c. Can the insurance company expect to make a profit from many such policies? Why? because the insurance company expects to make an average profit of $ on every 33-year-old male it insures for 1 year. (Round to the nearest cent as needed.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Engineering Mathematics

Authors: Erwin Kreyszig

4th Edition

471021407, 9780471021407

More Books

Students also viewed these Mathematics questions

Question

7.2 How might service industries predict revenue?

Answered: 1 week ago

Question

What would you do about the verbal homophobic insults?

Answered: 1 week ago