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

Algebra ->  Probability-and-statistics -> 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      Log On


   

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) About Me  (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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