suppose a life insurance company sells a $240,000 one year term life insurance policy to a...

suppose a life insurance company sells a $240,000 one year term life insurance policy to a 19 year old female for $270. the probability that the female survives the year is .999522. compute and interpret the expected value if this policy to the insurance company.

the expected value is $______

Expert Solution

Expected value of this policy to the insurance company

= $270 * 0.999522 - $(240000 - 270)*(1 - 0.999522)

= $ 155.28

orchestra answered 2 years ago

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