A home insurance company anticipates the following pattern of claims,based on historical data.What is the standard deviation of claims?

A) $2,562.79
B) $6,567,900
C) $2,000
D) $110
E) $3,753.52

Question

A home insurance company anticipates the following pattern of claims,based on historical data.What is the standard deviation of claims?

A) $2,562.79 
B) $6,567,900 
C) $2,000 
D) $110 
E) $3,753.52

Quizplus · Accepted Answer

Step 1 - Calculate the expected return. Expected return = E(k) = Pr₁k₁ + Pr₂k₂ + ... + Pr_nk_n Expected return = 0.0001 × $200,000 + 0.001 × $50,000 + 0.02 × $2,000 + 0.9789 × $0 = $110Expected return = $110 Step 2 - Use the expected return to calculate the standard deviation. Standard deviation = 11ea7fdb_fc12_1463_a768_57f400bc8c5d_TB2902_11 Standard deviation = 11ea7fdb_fc12_1464_a768_afb379c680f7_TB2902_11 Standard deviation = 11ea7fdb_fc12_1465_a768_79ce016f7af8_TB2902_11 = $2,562.79

A Home Insurance Company Anticipates the Following Pattern of Claims,based