SOLUTION: A 28-year-old man pays $125 for a one-year life insurance policy with coverage of $140,000. If the probability that he will live through the year is 0.9994, to the nearest dollar,

Algebra ->  Probability-and-statistics -> SOLUTION: A 28-year-old man pays $125 for a one-year life insurance policy with coverage of $140,000. If the probability that he will live through the year is 0.9994, to the nearest dollar,       Log On


   

Question 1036504: A 28-year-old man pays $125 for a one-year life insurance policy with coverage of $140,000. If the probability that he will live through the year is 0.9994, to the nearest dollar, what is the man’s expected value for the insurance policy?
A. $139,916
B. −$41
C. $84
D. −$124
Answer by robertb(5830) About Me  (Show Source):
You can put this solution on YOUR website!
B. −$41.
The man’s expected value for the insurance policy = %28140000-125%29%2A%281-0.9994%29+%2B+%28-125%29%2A0.9994+ = -$41.