Assume that John Liberman, a small business owner has the following loss distribution: Loss Probability 500,000 0.05 100,000 0.10 0 0.85 An insurance policy insures the above loss distribution with a deductible of $50,000. The premium that the insurance company charges is $50,000. Please estimate the standard deviation of John's costs (both insurance premium and deductible) after purchasing the insurance policy.

Answer rating: 100% (QA)

To estimate the standard deviation of Johns costs after purchasing the insurance policy we need to c... View the full answer