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FRST231 Discrete Random Variable For Single Policy

Questions:

1. A shipment of 7 computers contains 2 defective units. A forestry company makes a random purchase of 3 of the units. If X is the number of defective units purchased by the company, find the probability distribution of X. Express the results graphically as a probability bar graph.

2. A potential customer for a $90,000 fire insurance policy possesses a home in an area which, according to experience, may sustain a total loss in a given year with probability of 0.001and a 50% loss with probability 0.01. Ignoring all other partial losses, what premium should the insurance company charge for a yearly policy to make 10% above the break-even point?

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