A thirty year old women decides to pay $390 for a one-year life insurance policy with coverage of $150,000. The probability of her living through the year is 0.9976. What is her expected value for the insurance policy?

Question

amistre64 · Answer

cost * probability, but that 150000 is either noise ... or used someplace.  My gut says its noise

amistre64 · Answer

or, we can go this route

amistre64 · Answer

-390 * P(living) + 150000 * P(dieing)

amistre64 · Answer

if she lives, she loses 390
if she dies, she wins 150000 .... in theory lol