SOLUTION: 1. A woman pays a premium of $260 per year for a $20,000 life insurance policy. The probability that she will live for another year is 0.992. What is the expected value for the lif
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Question 867140: 1. A woman pays a premium of $260 per year for a $20,000 life insurance policy. The probability that she will live for another year is 0.992. What is the expected value for the life insurance policy?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
A woman pays a premium of $260 per year for a $20,000 life insurance policy. The probability that she will live for another year is 0.992. What is the expected value for the life insurance policy?
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Random "gain" for the company::.....260......-19,740
Probabilities:::...................0.992.....0.008
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Ans:: 0.992*260 - 0.008*19740 = $100
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Cheers,
Stan H.
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