Multiple Choice
Use the following setup for question
Both Nadia and Samantha are applying to insure their car against theft.Nadia lives in a secure neighborhood,where the probability of theft is 10%.Samantha lives in a lesser secure neighborhood where the probability of theft is 25%.Both Nadia and Samantha own cars worth $10,000,and are willing to pay $100 over expected loss for insurance.
-If the insurance company can successfully screen both Nadia and Samantha into appropriate contracts,it would earn
A) Between a zero and $200 loss
B) Between zero and $200
C) $3500 loss
D) $3500 gain
Correct Answer:
Verified
Correct Answer:
Verified
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