I have 2 STA-120 questions, can anyone help?
Quote:
1. You can insure a $500,000 for its total value by paying a premium of D dollars. If the probability of theft in a given year is estimated to be .01, what preminum should the insurance company charge if its wants the expected gain to equal $1000?
2. From experience, a shipping company knows that the cost of delivering a small package within 24 hrs is $14.80. The company charges $15.50 for shipment but guarantees to refund the charge if delivery is not made within 24 hours. If the company fails to deliver only 2% of its packages within 24-hrs period, what is the expected gain per package?
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