-5 + 50 - (-20)= 75. Why??
2 answers:
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Answer:
Expected Value = -$42 (loss of 42 dollars)
Step-by-step explanation:
Complete Question 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>
This means a loss of $42 (or -$42)