Respuesta :
Parts a through c is missing and it is;
a) From the perspective of the 33-year-old male, what are the monetary values corresponding to the two events of surving the year and not surviving?
The value corresponding to surviving the year is $_____.
The value corresponding to not surviving the year is $_____.
b) If the 33-year-old male purchases the policy, what is his expected value?
The expected value is $_____.
c) Can the insurance company expect to make a profit from many such policies? Why?
_____ because the insurance company expects to make an average profit of $_____ on every 33-year-old male it insures for 1 year.
Answer:
A) the value that corresponds to surviving the year = - $186
The value corresponding to not surviving the year = $99814
B) μ = -$56
C) Yes, the company can make a profit from many such policies because it makes an average profit of $56 on every 31 year old male it insures for 1 year.
Step-by-step explanation:
A) The company charges $186 for insuring. Thus;
Amount paid out = - $186
Therefore, the value that corresponds to surviving the year = - $186
Therefore, the value corresponding to not surviving the year = $100000 - $186
The value corresponding to not surviving the year = $99814
B) since probability that a 31 year old male survives is 0.9987, then;
Probability that a male doesn't survive is;
P(doesn't survive) = 1 - 0.9987
P(doesn't survive) = 0.0013
The expected value is calculated from;
μ = Σx•P(x) = (0.0013 × 99814) + (-186 × 0.9987)
μ = -$56
C) Yes, the company can make a profit from many such policies because it makes an average profit of $56 on every 31 year old male it insures for 1 year.
