A man won â€‹$5 million by scoring 16 goals in 23 seconds in a contest at...

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A man won â€‹$5 million by scoring 16 goals in 23 seconds in acontest at a sports game that was sponsored by a business. Did thebusiness risk the â€‹$ â€‹million? No! The business purchased eventinsurance from a company specializing in promotions at sportingevents. The event insurance company estimates the probability of acontestant winning the contestâ€‹ and, for a modestâ€‹ charge, insuresthe event. The promoters pay the insurance premium but take on noadded risk as the insurance company will make the large payout inthe unlikely event that a contestant wins. To see how itâ€‹ works,suppose that the insurance company estimates that the probability acontestant would win the contest is 0.0009 and that the insurancecompany charges â€‹$9,500
a. Calculate the expected value of the profit made by theinsurance company.

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In this case the expected value of profit is the sum of theprobability that an event occurs and the profit or loss associatedwith the eventThat isWhere Ex is the See Answer

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