quiz2AS-M_f10 - Econ 506, Section M Quiz 2A, Sept. 30, 2010...

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Econ 506, Section M NAME:_ SOLUTION_ _____ Quiz 2A, Sept. 30, 2010 Total points: 50 I. ( 8 points) if 25 percent of the balls in a certain box are red, and if 15 balls are selected from the box at random, with replacement, what is the probability that at least one red balls will be obtained? Assume Y = # of red balls obtained in 15 selection. Then Y has Binomial distribution with p = .25, n = 15. 98663654 . 0 01336346 . 0 1 ) 1 ( 0 15 1 ) 0 ( 1 ) 1 ( 0 15 0 = - = - - = = - = - p p Y P Y P II. (10 points) accident records collected by an automobile insurance company give the following information. The probability that an insured driver has automobile accidents is 0.15. If an accident has occurred, the damage to the vehicle amounts to 20% of its market value with a probability of 0.8, to 60% of its market value with a probability of 0.12, and to a total loss with a probability of 0.08. What premium should the company charge on a $12,000 car so that the expected gain by the company is zero? Complete the following
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quiz2AS-M_f10 - Econ 506, Section M Quiz 2A, Sept. 30, 2010...

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