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Homework answers / question archive / An insurance company specializes in insuring pets, but the insurance company has not yet decide how much it will charge its customers- let say M dollars

An insurance company specializes in insuring pets, but the insurance company has not yet decide how much it will charge its customers- let say M dollars

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An insurance company specializes in insuring pets, but the insurance company has not yet decide how much it will charge its customers- let say M dollars. It has decided though that if an insurer’s pet is lost, the company will pay the insurer $10 000 for compensation and the company expects on average to earn $50 on each policy. Suppose the chance of losing a pet is 15%.

What should be the value of M?

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