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A First Course in Probability (10th Edition)
10th Edition
ISBN: 9780134753119
Author: Sheldon Ross
Publisher: PEARSON
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Question
A private pilot wishes to insure his airplane for $200,000. The insurance company estimates that a total loss may occur with probability 0.002, a 50% loss with probability 0.01, and a 25% loss with probability of 0.10. Ignoring all other partial losses, what premium should the insurance company charge each year to realize an average profit of $500?
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