Question: You can insure a $50,000 diamond for its total value by paying a premium of D dollars. If the probability of loss in a given

You can insure a $50,000 diamond for its total value by paying a premium of D dollars. If the probability of loss in a given year is estimated to be .01, what premium should the insurance company charge if it wants the expected gain to equal $1000?

Step by Step Solution

★★★★★

3.42 Rating (165 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The random variable G total gain to the insurance company will be D if there is no ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

879-S-J-P-D (1830).docx

120 KBs Word File

Students Have Also Explored These Related Statistics Questions!

This data table contains the listed prices and weights of the diamonds in 48 rings offered for sale in The Singapore Times. The prices are in Singapore dollars, with the weights in carats. Use price...

The value of a diamond is determined by the four C's: carat weight, color, clarity, and cut. Carat weight is the standard measure for the size of a diamond. Generally, the more a diamond weighs, the...

Diamond Shamrock Corporation produces liquid chlorine that it ships to its customers Monday through Friday by truckload and railcar. To improve its scheduling, the companys plant manager would like...

33. Insuring Your Diamonds You can insure a $50,000 diamond for its total value by paying a premium of D dollars. If the probability of loss in a given year is estimated to be .01, what premium...

You can insure a $35,000diamond for its total value by paying a premium of D dollars.If the probability of loss in a given year is estimated to be 0.01, what premium should the insurance company...

There's nothing missing this is the document that I have from school nothing else. I don't know what to do either at this point. That's the only thing that is being provided from the instructor....

1. A CEO is considering buying an insurance policy to cover possible losses incurred by marketing a new product. If the product is a complete failure, a loss of $720,000 would be incurred; if it is...

Need work done and shown so I can study better for my exam. Thank you so much 1. Assuming that Ben, Jill, and Pam are three of the 26 members of the class, and that three of the class members will be...

1. A certain game involves tossing 3 fair coins, and it pays 10 cents for 3 heads, 5 cents for 2 heads, and 3 cents for 1 head. Is 5 cents a fair price to pay to play this game? That is, does the 5...

4.98 Insuring Your Diamonds You can insure a $50,000 diamond for its total value by paying a pre- mium of D dollars. If the probability of theft in a given year is estimated to be 0.01, what premium...

Allen College has a telephone system that is in poor condition. The system can be either overhauled or replaced with a new system. The following data have been gathered concerning these two...

You are thinking of opening a business. Which type of business organization would you choose to limit your personal liability and why? Be sure to compare the different types of business organizations...

Would companies be successful at simply banning the use of personal devices such as smartphones at work in order to protect the integrity of company networks? Why or why not?

(Advanced) Find the expected value of an upper-censored exponential random variable with censoring threshold .

15. Ice Hockey, continued Refer to Exercise 14. The mean and standard deviation of the 69 individual average acceleration measurements over the 6-meter distance were 2.962 and .529 meters per second,...

16. Ice Hockey, continued The mean and standard deviation of the speeds of the sample of 69 skaters at the end of the 6-meter distance in Exercise 14 were 5.753 and .892 meters per second,...

17. Audiology Research In a study to establish the absolute threshold of hearing, 70 male college freshmen were each seated in a soundproof room and a 150 H tone was presented at a large number of...

Letang Corporation expects an EBIT of $20,500 every year forever. The company currently has no debt, and its cost of equity is 15.5 percent. The company can borrow at 9.5 percent and the corporate...

for object oriented analysis and design. solce asap Q5: Make a Candidate Class List and CRC Cards of the following Statement Lecturers often miss appointments to see you because they forget that...

As part of research on the length of the growing season in mountain, meteorological stations are installed at di erent altitudes. The temperature average rature (in degrees celcius) as well as the...