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5 October, 20:38

An insurance company estimates the probability of an earthquake in the next year to be 0.0013.

The average damage done by an earthquake it estimates to be $60,000. If the company offers

earthquake insurance for $100, what is their expected value of the policy?

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  1. 5 October, 21:35
    0
    E[P] = $100/0.0013 = $76923.08
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