Explain how insurance companies use statistics.

Answers

Answer 1

Answer:

 Statistics is used to determine what risk an insured poses to an insurance company, what percentage of policies is likely to pay out, and how much money a company can expect to pay out in claims


Related Questions

Martha has $10,000 saved and wants to attend a college with a current tuition of $10,000 a year. She will graduate from high school in five years. Roughly how much more will Martha need to save for one-year’s tuition to account for an annual rate of inflation of 3%?

$1,590.00
$1,255.00
$300.00
$3,000.00

Answers

Answer:

$1,590.00

Explanation:

Martha has $10,000 saved one. She will join college after 5 years.

Tuition for one year is $10,000. Inflation rate is 3%

The applicable formula is A = P ( 1+ r) ^n

Where A = amount after 5 years

P= principal amount $10,000

r= interest rate 3% of 0.03

n = 5 years

A= $10,000( 1+ 0.03) ^5

A = $10,000 ( 1.03)^5

A= $10,000 x 1.159

A= 11,590.00

Marthe already has $10,000. She will need  11,590.00 - $10,000 more

=$1,590.00

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