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Compute expected value for amount in claims per person

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Reference no: EM131727145

Question: Refer to Exercise. If the insurance company wants to make a net profit of $10 per policyholder for the year, how much should it charge each person for insurance? Ignore administrative and other costs.

Exercise: An insurance company expects 10% of its policyholders to collect claims of $500 this year and the remaining 90% to collect no claims. What is the expected value for the amount they will pay out in claims per person?

Reference no: EM131727145

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