Question 1040073
E(x)=x*p(x)
+ side is 500*0.996, which is probability nothing will happen.
That is $498
- side is a claim, which is 100,000*0.004=$400
The average profit is $98 on each policy sold.
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One would expect a profit of $98000 for 1000 policies.
Let's look at expected value
500*996=498,000
minus 4 fires at $100,000 each, which is $400,000.  The profit is the difference, or $98,000