Solution-Interpretation of the expected value

Interpretation of the expected value

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Reference no: EM131849142

Suppose a life insurance company sells a ?190,000 ?one-year term life insurance policy to a 20?-year-old female for ? $370. The probability that the female survives the year is 0.999588. Compute and interpret the expected value of this policy to the insurance company. The expected value is ?$ nothing. ?(Round to two decimal places as? needed.)

Which of the following interpretation of the expected value is? correct?

A. The insurance company expects to make an average profit of ?$369.85 on every 20 dash year dash old 20-year-old female it insures for 1 year.

B. The insurance company expects to make an average profit of ?$26.52 on every 20 dash year dash old 20-year-old female it insures for 1 month.

C. The insurance company expects to make an average profit of ?$291.72 on every 20 dash year dash old 20-year-old female it insures for 1 year.

D. The insurance company expects to make an average profit of ?$33.62 on every 20 dash year dash old 20-year-old female it insures for 1 month.

Reference no: EM131849142

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Interpretation of the expected value

Reference no: EM131849142

Reference no: EM131849142

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