judocallin
New member
- Joined
- Jan 18, 2009
- Messages
- 12
Insurance. An insurance company insures a person's antique collection worth $20000 for an annual premium of $300. If the company figures that the probability of the collection being stolen is 0.002, what will be the company's expected profit?
My solution:
Expected profit = $300 – 0.002*20,000 =260
Our professor presented a different solution but came up with the same answer as mine. He multiplied 300 by 0.998 and subtracted the 0.002*(20,000-300)
can someone explain the process or am i wrong. Was it a coincidence
My solution:
Expected profit = $300 – 0.002*20,000 =260
Our professor presented a different solution but came up with the same answer as mine. He multiplied 300 by 0.998 and subtracted the 0.002*(20,000-300)
can someone explain the process or am i wrong. Was it a coincidence