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kolezko [41]
2 years ago
12

If an insurance company has 10000 policies, and each has 0.1 probability of making a claim, what is the standard deviation of th

e fraction of policies which result in a claim?
Mathematics
2 answers:
ale4655 [162]2 years ago
8 0

Answer: S.D = +/- 0.003

The standard deviation of the fraction of policies which result in a claim is +/- 0.003

Step-by-step explanation:

Given;

Probability of making a claim p = 0.1

Number of company policies n = 10000

Standard deviation is the measure of how spread out numbers are.

S.D = √(p(1-p)/n)

Where,

p = 0.1

n = 10000

S.D = √(0.1(1-0.1)/10000)

S.D = √(0.1×0.9/10000)

S.D = √(0.000009)

S.D = +/- 0.003

lilavasa [31]2 years ago
4 0

Answer:

0.003

Step-by-step explanation:

Since each of the policy have the same chance of success, then it follows a binomial distribution (only two outcome; success or failure).

α = √(p(1-p)/n) = √ (0.1 ( 1-0.1)/ 10000) = √ 0.000009 = 0.003

where p = 0.1, α = standard deviation.

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