An individual purchases a $525 catastrophic damage policy from an insurance company, where the individual receives $50,000 if they are affected by a catastrophe during the year. If the probability of encountering a catastrophe during the year is 0.000423, find the expected value of the policy for the individual. Show your work to receive credit.
expected value of the policy for the individual = (50,000-525)*0.000423+(-525)*(1-0.000423) = -503.85
An individual purchases a $525 catastrophic damage policy from an insurance company, where the individual receives...