An insurance company expects 10% of its policyholders to collect claims of $400 this year and the remaining 90% to collect no claims. The variable is the amount they will pay in claims per person.
a. Use this information to fill in.
Possible Outcome Numerical Outcome amount Pay in Claims per Person Probability in words
1. 1. 1.
2. 2. 2.
3. 3. 3.
b. What is the expected value for the amount they will pay in claims per person? Set up the calculation.