Question

3a. An insurance company offer contracts for a certain peril. In a contract period, which is 6 months, the following payoffs can occur:

payoff	Prob. Of loss
15000	0.015
12000	0.023
8000	0.028
6000	0.035

What is the probability that a contract will incur losses between 9500 and 14000 during a contract period?

3b. From a deck of cards two cards are drawn at random and without replacement. What is the probability that both cards have the same suit? If the suit of one of the two cards is heart, what is the probability that both cards are hearts?

Answer 1