A particular company offers a 500 deductible policy if the

Reference no: EM13638409

Let X be the damage incurred (in $) in a certain type of accident during a given year. Possible X values are 0, 1000, 5000, and 10000, with probabilities 0.82, 0.10, 0.06, and 0.02, respectively. A particular company offers a $500 deductible policy. If the company wishes its expected profit to be $100, what premium amount should it charge?

Reference no: EM13638409

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