There is a 0.9986 probability that a randomly selected 33-year-old male lives through the year. A life insurance company charge
s $182 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $110 comma 000 as a death benefit. Complete parts (a) through (c) below.
<em>"There is a 0.9986 probability that a randomly selected 33-year-old male lives through the year. A life insurance company charges $182 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $110 comma 000 as a death benefit. If a 33-year-old male purchases the policy, what is his expected value?"</em>
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We can say P(survival) = 0.9986 and thus P(not survival) = 1 - P(survival) = 1-0.9986 = 0.0014
Also,
In case 33 year old doesn't live, the payment would be 100,000 - 182 = $99,818
And
In case 33 year old lives, the payment is
-$182
We know, the <em>expected value is the sum of the product of each possibility with its probability.</em>
The value to increase is keeping A constant and decreasing the value of B
<h3>What are fractions?</h3>
Fractions are written as a ratio of two integers. For instance a.b is a fraction where a and b are integers.
In the fraction a/b, the numerator is and the denominator is b. If the value of the denominator is decreasing the fraction will increase but if the value of the denominator is increasing the fraction will decrease.
Given the expression A + 2/B, the higher the value of B provided such that that A is constant, the higher the expression. Hence the expression that will cause the value to increase is keeping A constant and decreasing the value of B