An Insurance Policy Costs $400,and Will Pay Policyholders $10,000 If

question 76

Multiple Choice

An insurance policy costs $400,and will pay policyholders $10,000 if they suffer a major injury (resulting in hospitalization) ,or $2,000 if they suffer a minor injury (resulting in lost time from work) .The company estimates that each year 1 in every 3,000 policyholders may have a major injury,and 1 in 1,000 a minor injury. Create a probability model for the company's profit on this policy.

• A) \[\begin{array} { l | c | c | c }
• \text { Profit } & \$ 400 & - \$ 10,400 & - \$ 2,400 \\
• \hline \text { P(profit) } & 0.9987 & 0.0003 & 0.001
• \end{array}\]
• B) \[\begin{array} { l | c | c | c }
• \text { Profit } & \$ 400 & \$ 10,000 & \$ 2,000 \\
• \hline \text { P(profit) } & 0.9987 & 0.0003 & 0.001
• \end{array}\]
• C) \[\begin{array} { l | c | c | c }
• \text { Profit } & \$ 400 & \$ 10,400 & \$ 2,400 \\
• \hline \text { P(profit) } & 0.9987 & 0.0003 & 0.001
• \end{array}\]
• D) \[\begin{array} { l | c | c | c }
• \text { Profit } & \$ 400 & \$ 9,600 & \$ 1,600 \\
• \hline \text { P(profit) } & 0.9987 & 0.0003 & 0.001
• \end{array}\]
• E) \[\begin{array} { l | c | c | c }
• \text { Profit } & \$ 400 & - \$ 9,600 & - \$ 1,600 \\
• \hline \text { P(profit) } & 0.9987 & 0.0003 & 0.001
• \end{array}\]

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Definitions:

Private Property

Land or belongings owned by individuals or entities, not by the government or public.

Costs

Costs refer to the expenses incurred in the production of goods or the delivery of services, or the sacrifices made in engaging in an activity.

Cohabitation

The scenario of living with someone and participating in intimate relations without the formal commitment of marriage.

Structural Factors

Elements related to the organization, framework, or underlying social structures that influence societal patterns and individual behaviors.