The insurer sells 4,000 such policies.

Question 48

MediumOriginal question

An insurer sells a one-year policy for a premium of ₹2,000. If the holder has an accident in the year, which happens with probability 0.005, the insurer pays out ₹1,00,000.

The insurer sells 4,000 such policies. What total gain does it expect?

₹59,60,000Correct answerYour answer₹60,00,000Correct answerYour answer₹60,00,001Correct answerYour answer₹80,00,000Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

Expectations add: $4{,}000 \times 1{,}500$ .
₹60,00,000.

Worth noting

₹80,00,000 is the premiums alone, before any claims.

Concept: Expected total over many policies
Typical timeTypical: 120 s
Your timeYours: —

The rule this testsMathematical expectation

Practise this chapter →

Ten questions from Random Variables, Expectation & Variance, at your own pace.

Practise this chapter →

Ten questions from Random Variables, Expectation & Variance, at your own pace.

The insurer sells 4,000 such policies.

Question 48

Explanation