An insurance company issues a one-year $1,000 policy insuring against an occurrence A that historically happens...

An insurance company issues a one-year $1,000 policy insuring against an occurrence A that historically happens to 3 out of every 100 owners of the policy. Administrative fees are $25 per policy and are not part of the company's "profit." How much should the company charge for the policy if it requires that the expected profit per policy be $60? [HINT: If C is the premium for the policy, the company's "profit" is C − 25 if A does not occur, and C − 25 − 1,000 if A does occur.]

=$?

Expert Solution

milcah answered 1 year ago

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