Math Problem Statement
Suppose a life insurance company sells a
$210 comma 000210,000
1-year term life insurance policy to a
2020-year-old
female for
$240240.
According to the National Vital Statistics Report, 58(21), the probability that the female survives the year is
0.9995440.999544.
Compute and interpret the expected value of this policy to the insurance company.
Question content area bottom
Part 1
The expected value is
$enter your response here.
Solution
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Math Problem Analysis
Mathematical Concepts
Expected Value
Probability
Financial Mathematics
Formulas
Expected Value (E) = (P(success) × Profit) + (P(failure) × Loss)
Theorems
Probability Theory
Suitable Grade Level
Grades 10-12
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