What is the expected claim payment made

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Reference no: EM132413658

Claim Payment Probability

0 0.74

1000 0.10

2500 0.07

10000 0.05

20000 0.03

100000 0.01

a. What is the expected claim payment made per customer in a year?

b. What is the probability that a randomly selected customer receives exactly the expected claim payment you calculated above in "a"?

c. What is the (sample) standard deviation of the claim payments made per customer in a year?

d. If the insurance company charges a $2500 premium to each customer, each year, then what amount does the insurance company make/lose per customer, each year? In a sentence or two, explain why the customers might be willing to pay the $2500 premium, given your calculations.

Reference no: EM132413658

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