Let X be the damage incurred (in $) in a certain type of accident during a given year.Possible X values are o, 1000,5000,and 10000,with probabilities .8,.1, .08,and .02, respectively.A particular company offers a $500 deductible policy. If the company wishes its expected profit to be $1OO, what premium amount should it charge?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Let X be the damage incurred (in $) in a certain type of accident during a given year.Possible X values are o, 1000,5000,and 10000,with probabilities .8,.1, .08,and .02, respectively.A particular company offers a $500 deductible policy. If the company wishes its expected profit to be $1OO, what premium amount should it charge?
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