There is a 0.9986 probability that a randomly selected 30-year-old male lives through the year. a life insurance company charges $166 for insuring that the male will live through the year. if the male does not survive the year, the policy pays out $110 comma 000 as a death benefit. from the perspective of the 30-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving?

There is a 0.9986 probability that a randomly selected 30 year old male lives through the year. A life insurance company charges $161 for insuring that the male lives through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit.

a. From the perspective of the insurance company what are the values corresponding to the two events of surviving the year and not surviving?

Random Number values: 161 and (-100,000+161)

b. What is the expected value for the insurance company?

E(x) = 0.9986*161 + 0.0014*(-99839) = $21.00

Step-by-step explanation:

There is a 0.9986 probability that a randomly selected 30 year old male lives through the year. A life insurance company charges $161 for insuring that the male lives through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit.

a. From the perspective of the insurance company what are the values corresponding to the two events of surviving the year and not surviving?

Random Number values: 161 and (-100,000+161)

b. What is the expected value for the insurance company?

E(x) = 0.9986*161 + 0.0014*(-99839) = $21.00