Values of a policy, An insurance policy sells for $1200.

Values of a policy

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Reference no: EM13114600

An insurance policy sells for $1200. Based on past data, an average of 1 in 125 policy holders will file a $15000 claim, an average of 1 in 100 holders will file a claim of $40,000 and an average of 1 in 250 holders will file a claim of $80,000.

a) Find the expected value to the company of each policy sold.

b) If the company sells 10,000 policies what is the expected profit or loss?

Reference no: EM13114600

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