SOLUTION: An insurance company insures a person's antique collection worth $20,000 for an anuual premium of $300.00. If the company figures that the probablity of the collection being stole

Question 130426This question is from textbook Statistics
: An insurance company insures a person's antique collection worth $20,000 for an anuual premium of $300.00. If the company figures that the probablity of the collection being stolen is 0.002, what will be the company's expected profit?
I have no clue on how to do this...please help This question is from textbook Statistics

Answer by scott8148(6628) (Show Source): You can put this solution on YOUR website!
the expected loss is the amount of the loss, $20000, multiplied by the probability of the loss, .002

the expected profit is the premium, $300, minus the expected loss, $40
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