Question 2 of sepling leaming In Lookout, CA there are three car owners, one car

Question

Question 2 of sepling leaming In Lookout, CA there are three car owners, one car thief, and an insurance company. Every year, one, and only one, car gets stolen with equal chance. The insurer offers a $12.,000 policy at 3 $5,000 premium. What are the chances of turning negative profits if the insurer services only two car owners? (Round to the hundredths place.) Number What is the expected profit? Number thousand dollars What are the chances of turning negative profits if the insurer services all three car owners? Number What is the expected profit now? Number thous and dollars Check Anawer Ned Hint

Explanation / Answer

Insurer is offering $12K policy for $5 K.

2 people will buy that insurance policy for $5 K each so insurance company would get 10K revenue

But by loosing car they still loose 2K. which is 20% loss.

Chances of negative profits is 100%.

-2000

0%, If three buy insurance the insurance company will make $3,000 as profit, 5000* 3 =15000 one car stolen so 12000 is paid off left with 3000

3000

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