There is a 0.9989 probability that a randomly selected 29-year-old male lives through the year. A life insurance company charges $197 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit.

Required:
a. From the perspective of the 29-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving?
b. If the 29-year-old male purchases the policy, what is his expected value?
c. Can the insurance company expect to make a profit from many such policies? Why?

a. Surviving the year: $197; Not surviving the year: $100,000

b. Expected value: $306.78

c. The insurance company can expect to make $86.49 in profit per policy.

We have,

a.

From the perspective of the 29-year-old male:

Surviving the year:

The monetary value is the cost of the insurance premium, which is $197.

Not surviving the year:

The monetary value is the death benefit paid out by the policy, which is $100,000.

b.

To calculate the expected value for the 29-year-old male, multiply the probability of each event by its corresponding monetary value and sum them up:

Expected Value = (Probability of Surviving * Monetary Value of Surviving) + (Probability of Not Surviving * Monetary Value of Not Surviving)

= (0.9989 * $197) + (0.0011 * $100,000)

= $306.78

c.

Expected Premium Revenue

= Probability of Surviving * Premium Amount

= 0.9989 * $197

≈ $196.49

Expected Payout

= Probability of Not Surviving * Death Benefit

= 0.0011 * $100,000

≈ $110

Profitability

= Expected Premium Revenue - Expected Payout

= $196.49 - $110

≈ $86.49

Since the expected premium revenue exceeds the expected payout, the insurance company can expect to make a profit from many such policies.

In this scenario, the insurance company can expect to make $86.49 in profit per policy.

Therefore,

a. Surviving the year: $197; Not surviving the year: $100,000

b. Expected value: $306.78

c. The insurance company can expect to make $86.49 in profit per policy.

Learn more about probability here:

https://brainly.com/question/14099682

#SPJ4

a. From the perspective of the 29-year-old male:

Surviving the year: The cost of insurance is $197.

Not surviving the year: The policy pays out a death benefit of $100,000.

b. The 29-year-old male's expected value is -$86.8013, indicating a potential loss.

c. Yes, the insurance company can expect to make a profit. The expected value is negative, meaning the company collects more in premiums than it pays out on average.

a. From the perspective of the 29-year-old male:

Surviving the year: The cost of insuring that the male will live through the year is $197.

Not surviving the year: The policy pays out a death benefit of $100,000.

b. To calculate the expected value for the 29-year-old male, we need to consider the probabilities of each event and their corresponding monetary values.

Expected Value = (Probability of surviving * Monetary value of surviving) + (Probability of not surviving * Monetary value of not surviving)

Probability of surviving = 0.9989

Monetary value of surviving = -$197 (since this represents the cost of insurance)

Probability of not surviving = 1 - Probability of surviving = 1 - 0.9989 = 0.0011

Monetary value of not surviving = $100,000

Expected Value = (0.9989 * -$197) + (0.0011 * $100,000)

Expected Value = -$196.8013 + $110

Expected Value = -$86.8013

Therefore, the expected value for the 29-year-old male is approximately -$86.8013.

c. The insurance company can expect to make a profit from many such policies because the expected value is negative (-$86.8013). The cost of insuring the male is $197, but the expected value is significantly less. This means that on average, the insurance company will collect more in premiums than it pays out in claims, resulting in a profit. The small probability of not surviving the year and the high payout of $100,000 contribute to the insurance company's ability to make a profit by spreading the risk among many policyholders.

for such more question on expected value

https://brainly.com/question/24305645

#SPJ8

Raul has $1,200 to deposit into two different savings accounts.

Raul will deposit $450 into Account 1, which earns 4.8% annual simple interest.

He will deposit $750 into Account 2, which earns 3.75 interest compounded annually.

Raul will not make any additional deposits or withdrawals. What is the total balance of these two accounts at the end of 4 years.

(A) $86.40

(B) $1405.39

(C) $536.40

(D) 868.99

what is 2/3 divided by 1/6
0 2
0 3
0 4
0 6​

Solve the quadratic equation using any appropriate method.
- 2x2 + 7x - 7 = 0

expression with parentheses..example and non-example​

100 yards on 20 carries

which rule describe the following pattern 8,4,10,6,12,8,14

solve for x and y!! will give brainliest !

How far from the base of the house do you need to place a 13-foot ladder so that it exactly reaches the top of a 10- foot tall wall

write the equation of the line parallel to the line below and passes through (-1,0)
parallel to the line with the points (0,3) and (1,0)

The $99.99 digital camera Mia purchased was on sale for 15% off. What amount did Mia get off the price? please leave an explanation

A store offers packing and mailing services to customers. The cost of shipping a box is a combination of a fiat packing fee of $5 and an amount based on the weight in pounds of the box, 8225 per pound. Which equation represents the shipping cost as a function of x, the weight in pounds? 1) = 225x45 5 f(x) = 5x + 225 1 = 2254 - 5 10) = 5% -225​

what does y= 3x - 2 equal?


​

PLEASE SERIOUSLY, I REALLY NEED HELP WITH THIS, I ASK YOU PLEASE

A paraboloid container is being filled with fluid at the rate of 4.5 cubic feet per minute. At what rate is the level of fluid changing when the depth
is 2.5 feet? The ratio of the radius to the height of the container is 3:7.
"V = 1/2 pir^2h

How do I write 55555 in expanded form

2.1,0.25,3.9,2 3/4,3.99 -4 1/2,-6,-1.5,-6.3,-4,-9 1/4 order these number for least to greatest

Of the numbers 7, 8, 9, and 10, which is a solution to the inequality n – 5 < 3? Hurry Plz

kkkmnkf;d;klsnfksdjlkfjk;asjdk;fjkasjd;f. fdjnsa;fdadf

Use the number line to determine the sum -7 + 10

Assuming each area code is just as likely as any other, what's the probability that the area code of two back to back spam calls are 804

Calculate and interpret the residual for the cars traveling 60 miles per hour

A line has a y-intercept at (0,4) and an x-intercept at (6,0). What is the slope of the line

Solve equation by completing the square. ​

101 lies between.
Find two consecutive whole numbers that

Question 5(Multiple Choice Worth 4 points)
The legs of a right triangle are 4 units and 7 units. What is the length of the hypotenuse?

Shelton mixed cups of purple cabbage and cups of lettuce to make a big salad. Each day he eats of a cup of salad. Which expression shows how many servings of salad Shelton has?

Write the equation of the line parallel to the line y= 5x + 3 that passes through the point (3,3)

1. Find the rate of change demonstrated in the
graph below.
30
27
24
21
18
DISTANCE (MILES)
15
12
9
09
3
1 2 3 4 5 6 7 8 9 10
TIME (HOURS)

Assume you have a balance of $1,900 on a credit card.
If the credit card has an annual interest rate of 13.6% and only the minimum monthly
payment of $35 is made, how many months will it take to pay off the credit card?

Use long division to divide.
6,552 divided by 3