Question

An insurance policy costs $120 and will pay policyholders $8,000 if they suffer a major injury (resulting in hospitalization) or $3500 if they suffer a minor injury (resulting in lost time from work). The company estimates that 1 in every 1940 policyholders will suffer a major injury and that 1 in 546 will suffer a minor injury. a) Create a probability model for the profit on a policy. b) What's the company's expected profit on the policy? c) What's the standard deviation? a) First find the probability and profit for each outcome. x P(event) Profit no injury major injury minor injury (Round to six decimal places as needed.) b) Find the expected profit on the policy. E(X) = $ (Round to two decimal places as needed.) c) Find the standard deviation on the policy. ? = SD(X) = $ (Round to two decimal places as needed.)

          An insurance policy costs $120 and will pay policyholders $8,000 if they suffer a major injury (resulting in hospitalization) or $3500 if they suffer a minor injury (resulting in lost time from work). The company estimates that 1 in every 1940 policyholders will suffer a major injury and that 1 in 546 will suffer a minor injury.
a) Create a probability model for the profit on a policy.
b) What's the company's expected profit on the policy?
c) What's the standard deviation?
a) First find the probability and profit for each outcome.
x P(event) Profit
no injury
major injury
minor injury
(Round to six decimal places as needed.)
b) Find the expected profit on the policy.
E(X) = $ (Round to two decimal places as needed.)
c) Find the standard deviation on the policy.
? = SD(X) = $ (Round to two decimal places as needed.)

An insurance policy costs 120 and will pay policyholders8,000 if they suffer a major injury (resulting in hospitalization) or 3500 if they suffer a minor injury (resulting in lost time from work). The company estimates that 1 in every 1940 policyholders will suffer a major injury and that 1 in 546 will suffer a minor injury.
a) Create a probability model for the profit on a policy.
b) What's the company's expected profit on the policy?
c) What's the standard deviation?
a) First find the probability and profit for each outcome.
x P(event) Profit
no injury
major injury
minor injury
(Round to six decimal places as needed.)
b) Find the expected profit on the policy.
E(X) = (Round to two decimal places as needed.)
c) Find the standard deviation on the policy.
? = SD(X) = (Round to two decimal places as needed.)

Added by Marc A.

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