An Insurance Company Receives 40 Claims in a Certain Month

question 109

Multiple Choice

An insurance company receives 40 claims in a certain month. Company policy mandates that a random selection of 5 of these claims be thoroughly investigated. If 3 of the 40 claims are fraudulent, find the probability that none of the fraudulent claims are thoroughly investigated. Round your answer to three decimal places. ​

• A)0.025
• B)0.001
• C)0.662
• D)0.493

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Definitions:

Profit-maximizing

A strategy or approach that aims to achieve the highest possible profit from business activities.

Marginal Revenue

The revenue increase from selling an additional good or service unit.

Competitive Price-searcher

A market condition where firms have some control over pricing because their products are differentiated, but they must still consider competitors' prices in their pricing strategy.

Retail Selling

The process of selling goods or services directly to consumers through various channels, such as stores, online platforms, or by phone.