(Solution) An automobile insurance company is offering a policy such that in the event of an accident, they will pay $27,000 to replace a vehicle for an annual... > Snapessays.com


(Solution) An automobile insurance company is offering a policy such that in the event of an accident, they will pay $27,000 to replace a vehicle for an annual...


An automobile insurance company is offering a policy such that in the event of an accident, they will pay $27,000 to replace a vehicle for an annual premium of $1,360  per year.  Suppose there is a 8.00% of policy holders being in an accident this year.For all of the numerical questions below, express your answer in 2 decimal places and exclude all non-numerical characters (e.g. $ % , ). Also, express the negative amounts by a minus sign (e.g. -10) A) What is the net amount the insurance company will pay after receiving the premium if a customer is in an accident? Express the amount as a negative number. Answer: Answer B) What is the amount the insurance company will receive if the customer is not in an accident? Answer: Answer C) What is the expected value of the insurance policy? Answer: Answer D) What is the standard deviation of the insurance policy? Answer: Answer E) Can we expect this to be a good policy for the insurance company if we assume that the company has no additional costs to enforce this insurance contract? Yes, the insurance company on average will earn a profit on these insurance policies given the accident rate.Yes, the standard deviation indicates that this is not a risky policy.No the insurance company on average will make a loss on these insurance policies given the accident rate.No, the standard deviation indicates that this is a risky policy.Not enough information to answer this question.

 


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This question was answered on: Sep 21, 2023

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