This Question: 1 pt 20 of 23 (15 complete) This Test: 23 pts out $80,000 as a de

Question

This Question: 1 pt 20 of 23 (15 complete) This Test: 23 pts out $80,000 as a death benefit. Complete parts (a) through (c) below the year A life insurance company charges $200 for insuring that the male will live through the year if the male does not survive the year, the Question Help I * le, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is The value corresponding to not surviving the year is s (Type integers or decimals. Do not round) b. If the 33-year-old male purchases the policy, what is his expected value? Round to the nearest cent as needed.) c. Can the urance company expect to make a proft from many such policies? Why? c nce company expects to make an average proft of s on every 33-year-old male it insures for 1 year nearest cent as needed.) No Yes O Type here to search 08 PM ^ 3/3/2018

Explanation / Answer

Solution:-
a. The value corresponding to surviving the year is $200
The value corresponding to not surviving the year is $79800
=> 80000 - 200 = 79800

b. The expected value is $-128
E(X) = (-200*0.9991)+(79800*0.0009) = -128

c.yes,the insurance company company can expect to make an average of $128 per policy of this type per year.

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