Question

Assume that you have a car worth $7300 and you wish to insure it for its full replacement value if it is stolen. If there is a 2% chance that the car will be stolen, what would a fair premium price be? A. $133.94 B. $152.98 C. $148.98 D. $161.30

Answer 1

$146

Explanation:

Expected Value:

The probability of your car getting stolen is 2% or .02. The total cost of your car is $7300. The probability of your car not getting stolen is 98% or.98. so the equation you'll be using is E=P*A+P*A which looks like this when adding all the number in.

E=7300(.02)+0(.98)=146

the zero just means your insurance did not pay anything:))

so the answer will be C, because they added taxes to it haha

Hope it helped

Answer 2

2% comes out to be .02 and the u divide