Mathematics, 07.12.2021 07:00 echavarrianoah
Avicenna, a major insurance company, offers five-year life insurance policies to 65-year-olds. If the holder of one of these policies dies before the age of 70, the company must pay out $24,100 to the beneficiary of the policy. Executives at Avicenna are considering offering these policies for $916 each. Suppose that for each holder of a policy there is a 4% chance that they will die before the age of 70 and 96% a chance they will live to the age of 70.
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