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Jun 01'22
Exercise
An insurer sells coverage on two types of risks, type A and type B, with the following loss probabilities:
| Type | P(L = 0) | P(L = 100) |
|---|---|---|
| A | 0.3 | 0.7 |
| B | 0.6 | 0.4 |
Assuming both types of risk are equally likely to be selected, determine the probability that the loss will equal to $100 for a randomly selected risk.
- 0.4
- 0.45
- 0.5
- 0.55
- 0.6