An Auto Insurance Company Evaluates Many Numerical Variables About a Person

question 58

Short Answer

An auto insurance company evaluates many numerical variables about a person before deciding on an appropriate rate for automobile insurance.The number of claims a person has made in the last 3 years is an example of a(n)____________________ random variable.

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Definitions:

Nominal Interest Rates

The interest rate before taking inflation into account, representing the face value of interest payments.

Inflation Rate

An increase in the overall price levels of goods and services in an economy during a specified period.

CPI

stands for Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Market Basket

A fixed set of goods and services whose total cost is used to track inflation and the cost of living over time through price changes.