SOLUTION: An insurance company insures your baseball card collection, worth $20,000, for an annual premium of $300. The company figures that the probablity of the collection being stolen is

Question 291113: An insurance company insures your baseball card collection, worth $20,000, for an annual premium of $300. The company figures that the probablity of the collection being stolen is .002. Based on this, what is the companys expected profit?
Answer by brucewill(101) (Show Source): You can put this solution on YOUR website!
The expected loss for any given year would be the value ($20,000) times the probability (0.002) or $40. Therefore, the profit for the insurance company would be $260 ($300 premium - $40 expected loss).
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