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An Automobile Insurance Company Estimates the Following Loss Probabilities for the Next

Question 27

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An automobile insurance company estimates the following loss probabilities for the next year on a $25,000 sports car: An automobile insurance company estimates the following loss probabilities for the next year on a $25,000 sports car: Assuming the company will sell only a $500 deductible policy for this model (i.e., the owner covers the first $500 damage), how much annual premium should the company charge in order to average $500 profit per policy sold? Assuming the company will sell only a $500 deductible policy for this model (i.e., the owner covers the first $500 damage), how much annual premium should the company charge in order to average $500 profit per policy sold?

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To determine the premium, the insurance ...

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