Insurance: An insurance company sells a 1-year term life insurance policy to an 79-year-old man. The...

Transcribed Image Text:

Insurance: An insurance company sells a 1-year term life insurance policy to an 79-year-old man. The man pays a premium of $4000. If he dies within 1 year, the company will pay $40,000 to his beneficiary. According to the U.S. Centers for Disease Control and Prevention, the probability that an 79-year-old man will be alive 1 year later is 0.9008. Let X be the profit made by the insurance company. Part 1 of 2 (a) Find the probability distribution. The probability distribution is x -36000 4000 P(x) 0.0992 0.9008 Alternate Answer: x -36,000 4000 P(x) 0.0992 0.9008 Part: 1/2 Part 2 of 2 (b) Find the expected value of the profit. Expected value of the profit is $ Insurance: An insurance company sells a 1-year term life insurance policy to an 79-year-old man. The man pays a premium of $4000. If he dies within 1 year, the company will pay $40,000 to his beneficiary. According to the U.S. Centers for Disease Control and Prevention, the probability that an 79-year-old man will be alive 1 year later is 0.9008. Let X be the profit made by the insurance company. Part 1 of 2 (a) Find the probability distribution. The probability distribution is x -36000 4000 P(x) 0.0992 0.9008 Alternate Answer: x -36,000 4000 P(x) 0.0992 0.9008 Part: 1/2 Part 2 of 2 (b) Find the expected value of the profit. Expected value of the profit is $

Answer rating: 100% (QA)

To find the expected value of the profit we need to multiply each possible profit outcome by i... View the full answer