Total loss A total-loss insurance policy pays $15,000 against a premium of $500 if a car is
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Total loss A total-loss insurance policy pays $15,000 against a premium of $500 if a car is considered a total loss. A company estimates that for such policies, the probability a car is considered a total loss is 0.0015. In a portfolio of n policies of this type, let X be the number of total loss cases.
a. Find the mean of the distribution of X in terms of n.
b. How large an n is needed so that ten total loss cases are expected to occur?
c. Using the value of n found in part
b, find the expected return of this company’s portfolio.
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Related Book For
Statistics The Art And Science Of Learning From Data
ISBN: 9781292164878
4th Global Edition
Authors: Alan Agresti, Christine A. Franklin, Bernhard Klingenberg
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