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How much should the company charge as an average premium

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Reference no: EM132584835

The table shows claims and their probabilities for an insurance company.
Amount of Claim              Probability

$O                                  0.60
$50.000                          0.25
$100.000                            0.09
$150.000                           0.04
$200.000                              0.01
$250.000                                0.01

Question (a) Calculate the expected value.

Question (b) How much should the company charge as an average premium so that it breaks even on its claim costs?

Question (c) How much should the company charge to make a profit of S60 per policy?

Reference no: EM132584835

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