A Home Insurance Company Anticipates the Following Pattern of Claims

Multiple Choice

A home insurance company anticipates the following pattern of claims, based on historical data. What is the expected claim on the next policy sold by the company? $\begin{array}{c}\begin{array}{|c|}\hline\\\\\\\text { Type of Claim }\\\hline1 \\\hline 2 \\\hline 3 \\\hline 4\\\hline\end{array}\begin{array}{c}\hline\\\\\\\text { Size of Claim }\\\hline \$ 200,000 \\\hline \$ 50,000 \\\hline \$ 2,000 \\\hline \$ 0\\\hline\end{array}\begin{array}{|c|} \hline \text {Number of}\\\text { Claims out of}\\\text {10,000 Policy }\\\text {Holders}\\\hline 1 \\\hline 10 \\\hline 200 \\\hline 9,789\\\hline \end{array}\begin{array}{c|}\hline\\\\\\\text { Probability } \\\hline 0.0001 \\\hline 0.001 \\\hline 0.02 \\\hline 0.9789\\\hline\end{array}\end{array}$

A) $100
B) $110
C) $120
D) $130
E) $140