Given the information in the diagram, which theorem best
2 answers:
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Answer:
$112.08 every year.
Step-by-step explanation:
Let's suppose a game in which we bet a certain amount of money ''A'' to a certain result and the probability of that result is ''p''. If the prize that we get is ''P'' therefore the expected value of gain is :
Now,let's suppose that the female is ''betting on her death'' ⇒
P(she survives) = 0.999592
P(she doesn't survive) = 1 - 0.999592=
E(25-year old female) =
The negative sign of E is important.It means that every year the 25-year old female will lose $112.08.
Therefore, the expected value of this policy to the insurance company is $112.08 every year.