Assume that you have a car worth $7,150 and you wish to insure it for its full replacement value. If there is a 2% chance that the car will be stolen, what would a fair premium price be?

Question

anonymous · Answer

fair=you netiher lose nor gain.
thus expectancy value =0 
because of the car's price is 7150, and you have 2% chance losing it, and the ramainder 98% goes to paying the premium price,
$$E=\sum x_i p_i = -7150(2/100) +(premium)(98/100)=0$$
solve for (premium), please.