D (a) A game is played using one die. There is a $1 charge to play the game f th
ID: 3054267 • Letter: D
Question
D (a) A game is played using one die. There is a $1 charge to play the game f the die is roiled and shows a five, the player receives $6 back ( a profit of s5 and the original $1). f any other number shows, the player loses the original $1. What is the player's expected value: b) An insurance corapany has figured the probabilities for various clain mounts for drivers in this table over a recent year. What is the expected roba bility 0.70 0.15 0.08 0.05 0.01 0.01 Amount claim amount? 2000 4000 6000 3000 co:Explanation / Answer
(a) P(die showing a 5) = 1/6
P(die not showing a 5) = 5/6
Expected value = expected gain - expected loss
= (6-1)x1/6 + (-1)x5/6
= 5/6 - 5/6
= $0
(b) Expected claim amount = sum of (amount x probability)
= 0.x0.7 + 2000x0.15 + 4000x0.08 + 6000x0.05 + 8000x0.01 + 10,000x0.01
= 300 + 320 + 300 + 80 + 100
= $1100
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.