Suppose that one year, an insurance company incurred dollar damages,
X, in four different amounts with probabilities, p(x), shown below:
If the company offers a $500 deductable and wants and wants an
expected profit of $150, how much should it charge for the premium?
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?