Question: two neighbors each face the same probability distribution for potential fire losses to their homes. (60% chance of no loss, 20% chance of $12,500 loss,

two neighbors each face the same probability distribution for potential fire losses to their homes. (60% chance of no loss, 20% chance of $12,500 loss, 10% chance of a $25,000 loss, 8% chance of $ 50,000 loss, and 2 % chance of $100,000 loss.) They agree that they will face the risk together and share all losses equally. For example, if neighbor one's house suffered a $100,000 loss and neighbor two's house has no loss, they will each pay $50,000. What is the probability of each neighbor paying $25,000 ?

A) 10%

B)10.6%

C)8%

D)13.4%

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