There is a 0.9985 probability that a randomly selected 29-year-old male lives through the year. A life insurance company charges $186 for insuring that the male will live through the year. If the male...


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There is a 0.9985 probability that a randomly selected 29-year-old male lives through the year. A life insurance company charges $186 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out<br>$120,000 as a death benefit. Complete parts (a) through (c) below.<br>

Extracted text: There is a 0.9985 probability that a randomly selected 29-year-old male lives through the year. A life insurance company charges $186 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $120,000 as a death benefit. Complete parts (a) through (c) below.
a. From the perspective of the 32-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving?<br>The value corresponding to surviving the year is $ – 185'.<br>The value corresponding to not surviving the year is $ 79,815'.<br>(Type integers or decimals. Do not round.)<br>b. If the 32-year-old male purchases the policy, what is his expected value?<br>The expected value is $ - 57.00.<br>(Round to the nearest cent as needed.)<br>c. Can the insurance company expect to make a profit from many such policies? Why?<br>Yes, because the insurance company expects to make an average profit of $ 57.00 on every 32-year-old male it insures for 1 year.<br>(Round to the nearest cent as needed.)<br>

Extracted text: a. From the perspective of the 32-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is $ – 185'. The value corresponding to not surviving the year is $ 79,815'. (Type integers or decimals. Do not round.) b. If the 32-year-old male purchases the policy, what is his expected value? The expected value is $ - 57.00. (Round to the nearest cent as needed.) c. Can the insurance company expect to make a profit from many such policies? Why? Yes, because the insurance company expects to make an average profit of $ 57.00 on every 32-year-old male it insures for 1 year. (Round to the nearest cent as needed.)

Jun 03, 2022
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