# How would I solve the following question: An insurance company sells policies for \$500. Based on...

How would I solve the following question: An insurance company sells policies for \$500. Based on past data, and average of 1 in 50 policy holders will file a \$10,000 claim, an average of 1 in 100 policyholders will file a \$20,000 claim, and an average of 1 in 250 policyholders will file a \$50,000 claim. Find the expected value (to the company) per policy sold. If the company sells 10,000 policies, what is the expected loss or profit?

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