Find the expected value of the collision policy holder

Reference no: EM13145385

The probability distribution for collision insurance claims paid by The Newton Automobile Insurance Company is as follow:
Claims Probability
0 0.90
500 0.04
1000 0.03
2000 0.01
3000 0.01
4000 0.01

A) Use the expected collision claim amount to determine the collision insurance premium that would allow the company to break even on the collision portion of the policy?

I got $140 ( is this correct?)

B) the insurance company charges an annual rate of $250 for the collision coverage. What is the expected value of the collision policy holder?

C) Why does the policy holder purchase a collision policy with the expected value in B)?

Reference no: EM13145385

Questions Cloud

Probability at least one is english standard engine : A sample of 3 is taken from a population of 12 engines. what is the probability that out of 3 taken, at least one is english standard engine?

Auditor at local firm when composing the letter : Draft a letter to Apollo Shoes that addresses the following key points; assume the role of an auditor at a local firm when composing the letter.

Adjusting journal entries for balance in allowance account : Prepare adjusting journal entries for the following and note the year-end balance in the allowance account. The allowance for uncollectible accounts has a $740 credit balance prior to adjustment.

Allowance for doubtful accounts credit balance : It is estimated that 4% of credit sales will be uncollectible. What adjusting entry will Manning Company make if the Allowance for Doubtful Accounts has a credit balance of $1,485 before adjustment?

Find the expected value of the collision policy holder : The insurance company charges an annual rate of $250 for the collision coverage. What is the expected value of the collision policy holder?

The osmotic pressure of the nicotine : A solution is prepared by dissolving 0.60g of nicotine in water to make 12mL of solution. The osmotic pressure of the solution is 7.55atm at 25 degrees C

Find the pmf of number of firms visited by inspector : The firms are actually violating at least one regulaltion, what is the pmf of the number of firms visited by the inspector that are in violation of at least one regulation?

What is the freezing point calcium nitrate : what is the freezing point(Degrees C) of a solution prepared by dissolving 11.3g of Ca(NO3)2 ( formula weight= 164g/mol) in 115g of water?

What proportions of the offspring will have the recessive : Consider the tetrahybrid cross between AaBbCCDD and AaBbCcDd. Assume that it is a dominant/recessive system and all genes are unlinked. What proportions of the offspring will have the recessive Phenotype for all four characteristics?

User Account

All Pages