a) When all factors are taken into account, an insurance company estimates that the probability of...

a) When all factors are taken into account, an insurance company estimates that the probability of my father making a claim for damages to his pontoon boat for $5000 is 0.1, and that the probability of the pontoon boat being totally destroyed is .005. Should that tragedy happen, the company will have to pay $15,000. The company charges my father $1000 for the insurance policy. What is the expected value of this policy to my father?

b) The world famous gambler and statistics professor from Columbus, Michelle Duda, proposes the following game of chance. You roll a fair die. If you roll a 1, then Michelle pays you $25. If you roll a 2, Michelle pays you $5. If you roll a 3, you win nothing. If you roll a 4 or a 5, you must pay Michelle $10, and if you roll a 6, you must pay Michelle $15. What is the expected value of Michelle's game?

Expert Solution

orchestra answered 2 years ago

What factors influence and are taken into account when imposing a tax?

An insurance company estimates the probability of an earthquakein the next year to be 0.0014....

An insurance company estimates the probability of an earthquake in the next year to be 0.0014. They estimate the average damage done by an earthquake to be $60,000. The company offers earthquake insurance for $100 per year, and when damage occurs, the company pays the full price to the customer. Suppose you are working for the company and want to plan for their future finicalness.A. What is the expected value of the insurance company's pay out to a customer in...

An insurance company estimates that the probability that a person’s car will be destroyed and need...

An insurance company estimates that the probability that a person’s car will be destroyed and need to be replaced in any given year is 0.03. The insurance company charges $2000 for the insurance policy, and if your car is destroyed, they will give you $25000 to buy a replacement car. Let X be the net earnings for the insurance company from one insurance policy. What is the expected net earnings for this insurance company? On average, will the insurance company...

iscuss the major factors that should be taken into account when deciding on the appropriate mix...

iscuss the major factors that should be taken into account when deciding on the appropriate mix of long term and short term borrowing necessary to finance the expansion program

What factors should be taken into consideration when HR/Employer is developing health insurance coverage for their...

What factors should be taken into consideration when HR/Employer is developing health insurance coverage for their employees?

Why do customers terminate relationships? Provide some examples. What factors should be taken into account when...

Why do customers terminate relationships? Provide some examples. What factors should be taken into account when planning reward and recognition programs?

Explain the terms leading and lagging and outline the factors that must be taken into account...

Explain the terms leading and lagging and outline the factors that must be taken into account before this approach is used.

Find the probability of the following: (Be sure to include all work) World Wide Insurance Company...

Find the probability of the following: (Be sure to include all work) World Wide Insurance Company found that 53% of the residents of a city had homeowner's insurance (H) with the company. Of these clients, 27% also had automobile insurance (A) with the company. If a resident is selected at random, find the probability that the residence has both homeowner's and automobile insurance with World Wide Insurance Company.

Suppose that an item is insured for $10,000. The insurance company estimates that there is a...

Suppose that an item is insured for $10,000. The insurance company estimates that there is a 1% chance that they will have to pay out on the policy. If they need to make a profit of 50%, explain what they should charge for the policy.

Is this part of the task taken into account when calculating net cash flow of the...

Is this part of the task taken into account when calculating net cash flow of the project? "The launching of the new product is expected to lead to a reduction in sales of the existing product. The contribution from existing sales is expected to reduce by €50,000 per annum over the life of the new product. Working capital of €500 000 will be required at the beginning of the project."

Question