Given IH = $1,500, IS = $230, and p = 7%, what is the value of...

Question

Question

Given I_H = $1,500, I_S = $230, and p = 7%, what is the value of E(I)?

$1,411.10

$1,388.90

$1,234

$318.90

none of the above

business economics

Answer 1

Answer #1

Given IH=$1500

IS=$230

Probability of being sick=p=7%

Expected value of I=E(I)=p*IS+(1-p)*IH=0.07*230+(1-0.07)*1500=$1411.10

Correct option is

$1411.10

Answer 2

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