FIND THE EXPECTED PROFIT OR LOSS VALUE FOR 100,000 POLICIES:

AN INSURANCE POLICY SELLS FOR $625. BASED ON PAST DATA, AN VERRAGE OF 1 IN 100 POLICY HOLDESWILL FILE $8000 claim, nd average of 1 in 250 policholders will file a $10,00 claim,and an average o 1 in 500 policy holders wil filea $30,000 clam. lst the appropriae forula, then compute your answer.

To find the expected profit or loss value for 100,000 policies, we need to calculate the expected value for each claim amount and then multiply it by the corresponding probability.

First, let's calculate the expected value for each claim amount:

Expected value for a $8,000 claim = amount of claim ($8,000) multiplied by the probability (1 in 100) = $8,000 * (1/100) = $80

Expected value for a $10,000 claim = amount of claim ($10,000) multiplied by the probability (1 in 250) = $10,000 * (1/250) = $40

Expected value for a $30,000 claim = amount of claim ($30,000) multiplied by the probability (1 in 500) = $30,000 * (1/500) = $60

Now, we can calculate the total expected value for all claim amounts:

Total expected value = (expected value for a $8,000 claim) + (expected value for a $10,000 claim) + (expected value for a $30,000 claim)
= $80 + $40 + $60
= $180

Finally, to find the expected profit or loss value for 100,000 policies, we multiply the total expected value per policy by the number of policies:

Expected profit or loss value = (total expected value) * (number of policies)
= $180 * 100,000
= $18,000,000

Therefore, the expected profit or loss value for 100,000 policies is $18,000,000.