QUESTION THREE You are concerned about the possibility of experiencing on Coronavirus (COVID-19) during the next year....

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QUESTION THREE
You are concerned about the possibility of experiencing onCoronavirus (COVID-19) during the next year. The probability of aCOVID-19 outbreak is 0.5%. Your local insurer offers to pay youK300, 000 if a registered member of your family contractedCOVID-19. The insurance policy costs K1, 500.00. If the inflationrate is forecast to be 10% during the next year, is the price ofinsurance policy fair.Â Â Â
A coin is biased so that it has a 60% chance of landing onheads. If it is thrown three times, find the probability ofgetting
ThreeheadsÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
2 heads and atailÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
At least oneheadÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â

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Question 3AThe probability of you experiencing COVID19 is 05 which is0005So the probability of you not experiencing COVID19 1 0005 0995Now we calculate the expected value of the insurance for youThe value for the You column is Benefits CostIf you experience COVID19 then the effective value for you 300000 1500 298500You are getting a beneft of 300000 and you are paying 1500 sothe effective value for you 300000 1500 298500If See Answer

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