Question: 1.Bob and Char have the same loss distribution: Loss = $0 with probability .7 Loss = $200 with probability .3 a.Find the expected loss and

1.Bob and Char have the same loss distribution:

Loss = $0 with probability .7

Loss = $200 with probability .3

a.Find the expected loss and standard deviation for the distribution. (2 points)

b.The two friends agree to pool losses.What is the changed probability distribution of losses for each person now? Show the new probability distribution. (1 point)

c.Find expected loss and standard deviation for each person with pooling. (2 points)

d.How does pooling affect expected loss? risk? (1 point)

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