Expected Loss for Pure Petro Insurance
Standard Deviation and Median interpretation based on Sales
July 9, 2019computation of basic statistics
July 9, 2019Pure Petro, Ltd. is buying hurricane insurance for its off-coast oil drilling platform. During the next five years, the probabilityof total loss of only the above-water superstructure ($250 million) is 0.30, the probability of total loss of the facility ($950 million) is 0.30, and the probability of no loss is 0.40. Find the expected loss.
A) $360,000,000
B) $400,000,000
C) $600,000,000
D) $250,000,000
E) $950,000,000
The solution provides step by step method for the calculation of expected loss from a probability distribution. Formula for the calculation is also included.
