Expected Value Insurance

Expected Value Insurance

12th Grade

13 Qs

quiz-placeholder

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Expected Value Insurance

Expected Value Insurance

Assessment

Quiz

Mathematics

12th Grade

Practice Problem

Hard

PS.SPMD.2

Standards-aligned

Created by

Anthony Clark

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13 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Media Image

A life insurance company sells a $250,000.00 life insurance policy to a 28 year old female in good health for an annual premium of $235.00. A 28 year old female in good health has a 0.999965 chance of surviving the year. What is the expected value for the insurance company if they sell 1000 such policies in a year?

-$75,000

$75,000

-$226,250

$226,250

Tags

PS.SPMD.2

2.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Media Image

You take out a fire insurance policy on your home. The annual premium is $300. In case of fire, the insurance company will pay you $200,000. The probability of a house fire in your area is 0.0002. 

What is the home owners expected value? 

$485,406.06

-$195,406.06

-$485,406.06

$195,406.06

Tags

PS.SPMD.2

3.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Media Image

HINT: Read carefully! And think about the TOTAL amount of money being gained or lost in each situation!

$275

$625

$2,750

$6,250

4.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Media Image

Find the expected value. READ CAREFULLY!

4.5

25.5

3.825

6.52

5.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

An insurance company charges $150 for a policy that will pay for at most one accident. For a major accident, the policy pays $5000; for a minor accident, the policy pays $1000. The $150 premium is not returned. • The company estimates that the probability of a major accident is 0.005, and the probability of a minor one is 0.08. • What is the expected value of the policy to the insurance company?

150

45

55

75

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Media Image

0.45
0.65
1.00
1.44

7.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Media Image

Box A
Box B
Box A or B, but not C
All boxes offer the same expected winnings

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