What is the insurance companys expected profit on her

Reference no: EM13642288

Julie is shopping for an car insurance policy. During the following year, there is a .01 probability that her car will be totally destroyed in an accident and she will lose $5,000. There is a .05 probability that she will have an accident in which she will lose $2,500. There is a .20 probability that an accident will cause $300 in damage. Suppose she pays $300 for her insurance policy. What is the insurance company's expected profit on her policy? That is, find the difference between the price of the policy and the company's expected payment to Julie.

Reference no: EM13642288

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