Amazon owns trucks used for cargo shipment. During their activities, Amazon sustains losses in the...

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Finance

Amazon owns trucks used for cargo shipment. During their activities, Amazon sustains losses in the form of property damages to their trucks. Assume that the Amazon owns a truck station located in Pennsylvania (PA) and another station in New Jersey (NJ).

The PA station has 4,000 trucks in total, while the NJ station has 2,000 trucks in total.

Amazon has collected data for the reported number of accidents per truck per year in the PA station and NJ station, respectively.

# of accidents per truck per year

# of trucks of having this # of accidents

PA Station

# of trucks of having this # of accidents

NJ Station

0 3720 1800
1 200 140
2 80 60

Based on the information in PA station, Amazon has constructed the following table related to the dollar amount of losses for the 360 reported accidents.

$ amount of losses per loss # of accidents having this $ amount of losses
$200 200
$1500 100
$4000 60

A.Derive the probability distribution for severity based on this data. Be careful to label exactly what you are defining as the probability distribution. [3 points]

B.Calculate the expected value of severity in the PA station. Show all work. [2 points]

C. Calculate the expected loss per truck in the PA station. Show all work. [2 points]

D.Calculate the expected loss for ALL trucks in PA station. Show all work. [2 points]

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