Purchase Solution

Values of a Policy

Not what you're looking for?

Ask Custom Question

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?

Purchase this Solution

Solution Summary

This solution provides steps to find the expected value and expected profit or loss.

Solution Preview

Hi there,

Here is my explanation:

a) For each policy, the profit = 1200 ...

Purchase this Solution

Free BrainMass Quizzes
Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.