Daniel-James Insurance company will ensure an offshore Mobil Oil production platform against weather losses for one year. The president of Daniel-James estimates the following losses for that platform(in millions of dollars) with the accompanying probabilities:
|
Amount of Loss
(in millions of dollars)
|
Probability
|
|
0
|
0.98
|
|
40
|
0.016
|
|
300
|
0.004
|
Question A: What is the expected amount Daniel james will have to pay to mobil in claims?
Question B: What is the likelihood that Daniel james will actually lose less than the expected amount?
Question C: Given that Daniel james suffers a loss, what is the likelihood that it is over 300 million?
Question D: Daniel james has set the annual premium at 2.0 million. does that seem like a fair premium? will it cover its risks?