STT 421 Summer 2008 Quiz
#2
Name:
PID:
(10pts)
Problem 1.
An insurance company writes policy that pays $1000
.
00
for the loss due to the theft of a jewelry.
The probability of the theft is
assessed to be 0.02 and the premium is $80
.
00(in other words the amount
you pay to buy the policy is $80
.
00 ).
(5pts)
(a)
Find the distribution function(possible values and corresponding
probabilities) of
X
=profit of the company from one policy in $.
(5pts)
(b)
What is the mean value of
X
?
1
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
(10pts)
Problem 2.
Let
X
1
, X
2
, X
3
, represent the times (random variables)
necessary to perform three successive subprojects at a certain company.
Suppose they are independent random variables with means
μ
1
=
μ
2
=
μ
3
=
50 minutes, and Standard deviations
σ
1
=
σ
2
=
σ
3
= 10 minutes.
(3pts)
a.
What is the mean time required for the entire project(
X
1
+
X
2
+
X
3
)
?
(2pts)
b.
What is the standard deviation of the time required for the entire
project?
(1pts)
c.
In which of the parts
a. b.
did you use the condition of indepen
dence?
This is the end of the preview.
Sign up
to
access the rest of the document.
 Summer '08
 NANE
 Conditional Probability, Standard Deviation, Probability theory, insurance company, $1000.00

Click to edit the document details