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QUESTION
b) What should the company charge as an annual premium in order to achieve an expected profit of $200 per policy. Here we assume profit = annual...
- b) What should the company charge as an annual premium in order to achieve an expected profit of $200 per policy. Here we assume profit = annual premium - claim amount.
- (c) Assume the company receives a positive claim request from a policy holder. What is the proba- bility this claim request is for $6000 or more? A zero claim amount means no claim was issued. Hint: Think about what is known here.
- (d) Assume the company has 3 independent policies. What is the probability all 3 of these policies have some positive claim amount?
