Suppose a life insurance company sells a $280,000 one-yearterm life insurance policy to a 20-year-old female for $300. Theprobability that the female survives the year is 0.999585.Compute and interpret the expected value of this policy to theinsurance company....The expected value is $(Round to two decimal places as needed.)Which of the following interpretation of the expected value iscorrect?O A. The insurance company expects to make an averageprofit of $16.71 on every 20-year-old female it insuresfor 1 month.OB. The insurance company expects to make an averageprofit of $27.26 on every 20-year-old female it insuresfor 1 month.OC. The insurance company expects to make an averageprofit of $299.88 on every 20-year-old female it insuresfor 1 year.D. The insurance company expects to make an averageprofit of $183.80 on every 20-year-old female it insuresfor 1 year.

Given: one-year insurance price=$280,000 probability that female survives=0.999585 female bought…

Answered: The expected value is $ (Round to two…

The expected value is $ (Round to two decimal places as needed.) Which of the following interpretation of the expected value is correct? O A. The insurance company expects to make an average

College Algebra

10th Edition

ISBN:9781337282291

Author:Ron Larson

Publisher:Ron Larson

Chapter8: Sequences, Series,and Probability

Section: Chapter Questions

Problem 41CT: On a game show, a contestant is given the digits 3, 4, and 5 to arrange in the proper order to form...

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Q: Suppose

Question

100%

Suppose a life insurance company sells a $280,000 one-year
term life insurance policy to a 20-year-old female for $300. The
probability that the female survives the year is 0.999585.
Compute and interpret the expected value of this policy to the
insurance company.
...
The expected value is $
(Round to two decimal places as needed.)
Which of the following interpretation of the expected value is
correct?
O A. The insurance company expects to make an average
profit of $16.71 on every 20-year-old female it insures
for 1 month.
OB. The insurance company expects to make an average
profit of $27.26 on every 20-year-old female it insures
for 1 month.
OC. The insurance company expects to make an average
profit of $299.88 on every 20-year-old female it insures
for 1 year.
D. The insurance company expects to make an average
profit of $183.80 on every 20-year-old female it insures
for 1 year.

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