There is a 0.9985 probability that a randomly selected 29-year-old male lives through the year. A life insurance company charges $169 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit. Complete parts (a) through (c) below.
a. From the perspective of the 29-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is $169. The value corresponding to not surviving the year is $100,000. (Type integers or decimals. Do not round.)
b. If the 29-year-old male purchases the policy, what is his expected value? The expected value is -$830.15. (Round to the nearest cent as needed.)
c. Can the insurance company expect to make a profit from many such policies? Why?
No, because the insurance company expects to make an average profit of -$830.15 on every 29-year-old male it insures for 1 year. (Round to the nearest cent as needed.)