Answered

Acasa Insurance Company offers several plans for home insurance.


Plan A has a $700 yearly premium with a $3,000 deductible.

Plan B has a $1,200 yearly premium with a $1,000 deductible.


The average payout by the insurance company for a fire claim is $27,000. Suppose 5% of the claims were for fire damage. What would Acasa's expected value (loss or gain) be per customer who chooses plan A?


-$25,300

-$1,350

$850

-$500

Verified Answer :

Acasa's expected value loss  be per customer who chooses plan A

Assumption

Fill customers choose plan A

The average payout is the same for plans A & B

Expected value = Net payment in - Net payment out

⇒ 1000% × 700$ - 5% ×[27000$ - 3000$]

⇒ 700$ - 1200$

⇒ -500$

What are a profit and loss?

A profit and loss statement is a record of revenue and expenses incurred by a business in a given period of time. A profit and loss statement is also called a P&L, an income statement, a statement of profit and loss, and income and expense statement, or a statement of financial results.

Learn more about profit and loss here: https://brainly.com/question/19104371

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