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A Cell Phone Company Offers a Simple Extended Warranty Plan

question 10

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A cell phone company offers a simple extended warranty plan. If your phone is damaged, they will repair it for up to $50. If you lose or destroy your phone, they will give you a $200 voucher towards a new phone. The company believes that 5% of customers will need the replacement voucher and 10% will request a repair.
-What is the standard deviation of their profit?


Definitions:

Strike Price

The fixed price at which an options contract may be purchased or sold upon its exercise.

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