What is the promoters expected profit

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Reference no: EM13911708

A rock concert promoter has scheduled an outdoor concert on July 4th. If it does not rain, the promoter will make $30,000. If it does rain, the promoter will lose $15,000 in guarantees made to the band and other expenses. The probability of rain on the 4th is .4.

a. What is the promoter's expected profit? Is the expected profit a reasonable decision criterion? Explain.

b. How much should an insurance company charge to insure the promoter's full losses? Explain your answer.

Reference no: EM13911708

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