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yanalaym [24]
3 years ago
7

Jacob is looking to buy some car insurance and is reviewing different policies from several different agencies. The first policy

he sees costs$750 for the upcoming year and is worth $10000 if he gets in a collision.After doing some research, he estimates that he has a 8% of getting in acar accident for that year. What is the expected value of buying this insurance policy
Business
1 answer:
Lostsunrise [7]3 years ago
5 0

The expected value of buying this insurance policy is $50.

The expected value of buying the insurance policy is the weighted average of probabilities of the cost of the insurance and the cover if Jacob gets into an accident.

If Jacob gets into an accident and is covered, his payout will be:

= benefit - cost

= 10,000 - 750

= $9,250

The probability of this happening is 8%.

If Jacob does not get into an accident he would lose the $750 he paid in insurance premiums. The probability of this happening is:

= 100% - 8%

= 92%

The expected value of the insurance is:

= (probability of accident * payout if there is an accident) + (probability of no accident * payout if there is no accident)

= (8% * 9,250) + (92% * -750)

= $50

<em>More information on expected value can be found at brainly.com/question/17069001.</em>

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Explanation:

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Intergroup conflict in an organization helps the people to come out with their own ideas with creative thinking.

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To resolve the problems in intergroup conflict people should openly discuss about the impact that the conflict has on productivity.

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vulnerability

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Usually individuals place themselves in a position of vulnerability in a relationship when they have a very high degree of affection for the other person and assume the risk of being emotionally exposed.

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Elise Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $400,000 and
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