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Question: acme insurance company is looking to at its historical claims...

Question details

ACME insurance company is looking to at its historical claims for a particular type of policy. In the past, payouts and their probability of occurring are given by:

 

Payout

Probability

0

0.82

500

0.03

1000

0.05

3000

0.04

5000

0.03

10000

0.02

15000

0.01

 

aA. What is the minimum amount ACME has to charge customers in order to ensure that they break even.

 

B B) What is the standard deviation of the payout. Does it have any meaning here, and what does it imply about the riskiness of insurance?

 

d***Please help me work this out on word, no hand written or symbols please***

 

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