Provide an Appropriate Response $\$ 250$
B: If the Company Sells Only a Few Policies

question 38

Multiple Choice

Provide an appropriate response.
-An insurance company sells an insurance policy for $1000. If there is no claim on a policy, the company makes a profit of $1000. If there is a claim on a policy, the company faces a large loss on
That policy. The expected value to the company, per policy, is $250.
Which of the following statements is (are) true? A: The most likely outcome on any single policy is a profit for the company of $\$ 250$ .
B: If the company sells only a few policies, its profit is hard to predict.
C: If the company sells a large number of policies, the average profit per policy will be close to \$250.

• A)B and C
• B)A and C
• C)B only
• D)C only

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Definitions:

Real GDP

Gross Domestic Product corrected for inflation levels, offering a clearer view of the economy's scale and its growth trajectory over time.

Billion

A numerical value representing one thousand million (1,000,000,000) in the short scale, and commonly used in financial contexts.

Year

A period of time consisting of 12 months or 365 days (366 in a leap year), used as a basic unit of time for calendrical purposes.

Trade Surplus

A situation in which a country's exports exceed its imports, leading to a positive balance of trade.