Question: Student Life Insurance Company wants to offer an insurance plan
Student Life Insurance Company wants to offer an insurance plan with a maximum claim amount of $5,000 for dorm students to cover theft of certain items. Past experience suggests that the probability of a maximum claim is .01. What premium should be charged if the company wants to make a pro t of $25 per policy? Assume any student who les a claim les for the maximum amount and there is no deductible. Show your calculations clearly.
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