Explore BrainMass

Explore BrainMass

    Statistics Probability Problem

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    From past experience, an automobile insurance company knows that a given automobile will suffer a total loss with probability .02, a 50% loss with probability .08, or a 25% loss with probability .15 during a year. What annual premium should the company charge to insure a $10,000 automobile, if it wishes to "break even" on all policies of this type? (Assume there will be no other partial loss)

    © BrainMass Inc. brainmass.com December 24, 2021, 4:47 pm ad1c9bdddf

    Solution Preview

    x p(x)
    $10,000 .02 (represents a total loss)
    $5,000 .08 (represents a 50% loss)

    Solution Summary

    This solution provides the answer to the probability problem. Supplementary examples are also provided.