- #1

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## Homework Statement

Suppose that one year, an insurance company incurred dollar damages,

X, in four different amounts with probabilities, p(x), shown below:

X

0

1000

5000

10000

p(x)

0.7

0.2

0.08

0.02

If the company offers a $500 deductable and wants and wants an

expected profit of $150, how much should it charge for the premium?

## Homework Equations

Not even sure what's relevant here. Maybe the expected value is involved somehow:

E(x) = sum ( x*p(x) ) = 800

## The Attempt at a Solution

How would I even go about with a problem like this?