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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

Sagot :

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: brainly.com/question/19104371

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