Question

Florida State Brewing determines that its liability losses have the following distribution: Probability 0.02 0.08 0.10 Loss 5,000 $ 3,500 $ 2,000 500 0.15 0.65 $ 0 1. Graph/Sketch the probability distribution. 2. What is the expected value of the liability losses? 3. What is the variance and standard deviation of the liability losses? 4. Explain why variance and standard deviation are useful measures of risk. 5. Using your graph from part A, comment on the skewness of the liability losses.

please show calculations as well, thank you!

Answer 1

Please find the answer in the images attached.

ک. و این کاه امام 0.9 0.02 89 2000 4000 مم2 SOD

a) | Expected lows = 5000 x0-02 3500 x 0.0p + 200x.0.10 +500x 0.15 + 010-657 = 100 + 280 T 200+ 75to 655. __B) Varience. - Ellos) – (E160) El Class 2 = 2000 ² x 0-02 + 3500 xoop + 2000 ²x0.1 + 100% xoir t 0²x0.65 3750000 + 980000 † 400 000 7 37 500 to = 5167500 Variance = 566 7500 - 653 = 4738475 Standard deaviahon = Varience = 1 4738475 = 2176.804 Variance and standard deviation are useful measures of risk since they help theo individual know the extent of variability they can expect in their outcoles. s Liability I highes leading losses are so positively loss is associated with to a flatter and longed skewed since lower brobability right fail.