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Calculate losses to Callaghan Company

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1. Losses to Callaghan Company are assumed to be distributed normally, with a mean of $75,000 and a standard deviation of $4,000. Calculate the probable range of losses if the risk manager desires 95 percent confidence in the estimate.

2. QAZ Company owns a fleet of 100 automobiles, for which the probability of loss is approximately equal to 0.05. Use the Poisson distribution to estimate the probability that QAZ will suffer two or fewer auto accidents next year.

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The expert calculates losses to Callaghan Company.

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1. Losses to Callaghan Company are assumed to be distributed normally, with a mean of $75,000 and a standard deviation of $4,000. Calculate the probable range of losses if the risk manager desires 95 percent confidence in the estimate.

Lower Limit = mean - z x standard ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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