Question: A firm estimates that, for each exposure unit, it has an 80 percent chance of having $0 in losses, a 15 percent chance of having

A firm estimates that, for each exposure unit, it has an

A firm estimates that, for each exposure unit, it has an 80 percent chance of having $0 in losses, a 15 percent chance of having losses of $10,000, and a 5 percent chance of having losses equal to $30,000. In this case, loss severity per exposure unit is: $1,500 $0 $20,000 $13,333 $3,000

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