Using probability we know that the expected value of the insurance company is $141.
<h3>
What is probability?</h3>
- The area of mathematics known as probability deals with numerical representations of the likelihood that an event will occur or that a proposition is true.
- An event's probability is a number between 0 and 1, where, roughly speaking, 0 denotes the event's impossibility and 1 denotes certainty.
- Simply put, the probability is the likelihood that something will occur.
- When we don't know how an event will turn out, we can discuss the likelihood or likelihood of various outcomes.
- Statistics is the study of events that follow a probability distribution.
So, the expected value of the insurance company:
- Probability = 0.9987
- So, 1.0000 - 0.9987 = 0.0013
Now, get the expected value as follows:
- E(x) = 0.9987 × 154 + 0.0013(-9987)
- E(x) = 153.7998 + (-12.9831)
- E(x) = 153.7998 - 12.9831
- E(x) = 140.8167
Rounding off: $141
Therefore, using probability we know that the expected value of the insurance company is $141.
Know more about probability here:
brainly.com/question/25870256
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The complete question is given below:
There is a .9987 probability that a randomly selected 27-year-old male lives through a year. a life insurance company charges $154 for ensuring 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.
What is the expected value for the insurance company?
