This table shows claims and their probablity for an insurance company.

AMOUNT OF CLAIM PROBABILITY
$0 0.65
$50,000 0.25
$100,000 0.06
$150,000 0.02
$200,000 0.01
$250,000 0.01

1. Calculate the expected value?
2. How much should the company charge as an average premium so that it breaks even on its claim cost?

1 answer

27,000

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