Purchase Solution

Probability and Expected Loss

Not what you're looking for?

Ask Custom Question

X=age(years) 60 61 62 63 64
p(death at this age 0.00756 0.00825 0.00896 0.00965 0.01035

a) What is the probability that sara will die in her 60th year? using this probability and the $50,000 death benefits, what is the expected loss?
b) Repeat part(a) for years 61,62,63, and 64. What would be the total expected loss over the years 60 through 64?
c) If the insurance wants to make a profit of $700 above the expected total loss paid out for Sara death, how much should it charge for the policy?
d) If the insurance company charges $5,000how much profit does the company expect to make?

Purchase this Solution
Solution Summary

This solution shows step-by-step calculations in an Excel file to determine the probability that Sara will die on her 60th birthday as well as the charge for policy, profit the company makes and total expected loss.

Purchase this Solution
Free BrainMass Quizzes
Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.

Know Your Statistical Concepts

Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.

Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.

Terms and Definitions for Statistics

This quiz covers basic terms and definitions of statistics.

View More Free Quizzes
Related BrainMass Solutions

  • Loss Probability

    0.84 What is the fair premiums for full coverage if the competitive loading (administrative costs and capital costs) equals 15% of expected claim costs?

  • An insurer sells a very large number of policies to people w

    Calculate the expected claim cost per policy. b. Assume claims are paid one year after premiums are received and that the interest rate is 6 percent. Calculate the discounted expected claim cost per policy. c.

  • Expected Loss for Pure Petro Insurance

    During the next five years, the probability of total loss of only the above-water superstructure ($250 million) is 0.30, the probability of total loss of the facility ($950 million) is 0.30, and the probability of no loss is 0.40.

  • Probability of Loss

    Probability Safety of Loss Expenditures 0.030 $ 0 0.020 1,000 0.015 2,000 0.012 3,000 0.0095 4,000 0.009 5,000 There are two costs that impact this calculation: the expected cost to the victim and the safety expenditures

  • Betting

    / (n+m) Therefore expected loss = Probability x loss amount = {h1 (n+m)/m} x {m / (n+m)} = h1 Amount that the bookmaker loses if horse 2 wins and horse 1 loses Amount lost on horse 2 = h2 (m/n ) + h2 = h2 (m/n + 1 ) = h2 (m+n) / n Probability

  • Expected value of a loss - probability - statistics

    with probability of 0.15 $ 20,000 with probability of 0.12 $ 0 with probability of 0.60 What is the expected value of loss due to exchange rate change?

  • Expected value of an insurance policy

    459553 Expected value of an insurance policy 1. You own a $9,000 car and a $850 mountain bike. The probability that your car will be stolen next year is 0.02, but the probability that your bike will be snatched is 0.1.

  • Expected Opportunity Loss in Blossom's Flowers

    is 100: left over roses = 100 loss/rose = $5 Net loss = $500 Probability = 0.2 Expected Loss =.2 x-500 = -$100 senario that demand is 400: lost opportunity to sell = 200 loss/rose = $10 Net loss = $2000 Probability = 0.4 Expected

  • Expected Profit

    Price is $22.5= Than the Profit = 30-22.5= $7.50 Expected Profit= Probability * Profit =$3.00 A) 60% Probability of Price is $42.5= Than the Loss = 30-42.5= ($12.50) Expected Profit= Probability * Profit =($7.50) Thus Expected

View More Related Solutions