Homework: Section 6.1 Homework Score: 0 of 1 pt 6.1.25 Save 7of11(3complete) | H

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Homework: Section 6.1 Homework Score: 0 of 1 pt 6.1.25 Save 7of11(3complete) | HW Score: 27.27%, 3 of 11 pts Question Help Suppose a life insurance company sells a $210,000 one-year term life insurance policy to a 21-year-old female for $340. The probability that the female survives the year is 0.999578. Compute and interpret the expected value of this policy to the insurance company. The expected value is (Round to two decimal places as needed.) Enter your answer in the answer box and then click Check Answer Check Ansiwor Clear All 25

Explanation / Answer

the expected value of this policy to the insurance company

P[female DOESN'T survive] = 1-0.999578 = 0.000422

E[x] = 340 - 210000*0.000422 = $251.38

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