Q. Suppose that Kate also Anne enter into a pooling arrangement. Assume that both women have the subsequent loss distributions also that losses are independent.

$50,000 with probability of 0.005
$20,000 with probability of 0.01
$10,000 with probability of 0.02
$0 with probability of 0.965

a. Write out the possible outcomes also the probability of each outcome for Kate also Anne after they enter into a pooling arrangement. That is, writ out the probability distribution for each of the women after they enter into a pooling arrangement.

b. Calculate the expected loss to each person prior to also subsequent to entering into a pooling arrangement.

c. Illustrate what happens to the standard deviation of the distribution of losses to each individual subsequent to the pooling arrangement?