ACME insurance company is looking to at its historical claims for a particular type of policy. In the past, payouts and their probability of occurring are given by: Payout Probability 0 0.82 500 0.03 1000 0.05 3000 0.04 5000 0.03 10000 0.02 15000 0.01 A)What is the minimum amount ACME has to charge customers in order to ensure that they break even.B) What is the standard deviation of the payout. Does it have any meaning here, and what does it imply about the riskiness of insurance?

ACME insurance company is looking to at its historical claims for a particular type of policy. In the past, payouts and their probability of occurring are given by: Payout Probability 0 0.82 500 0.03...

ACME insurance company is looking to at its historical claims for a particular type of policy. In the past, payouts and their probability of occurring are given by:

Payout	Probability
0	0.82
500	0.03
1000	0.05
3000	0.04
5000	0.03
10000	0.02
15000	0.01

A)What is the minimum amount ACME has to charge customers in order to ensure that they break even.

B) What is the standard deviation of the payout. Does it have any meaning here, and what does it imply about the riskiness of insurance?

Jun 08, 2022

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ACME insurance company is looking to at its historical claims for a particular type of policy. In the past, payouts and their probability of occurring are given by: Payout Probability 0 0.82 500 0.03...

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