If p is less than the maximum insurance policy payout of, Ask an Expert

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The insurance payout is the amount of money the insurance company must pay if the holder of the policy files a claim. So, if no claim is made, then the insurance payout is just $0; however, whenever a claim is made, the amount of money on the claim, P , has an exponential distribution with mean $1,000,000. If P is less than the maximum insurance policy payout of $2,000,000, then the insurance payout is equal to P, otherwise, the insurance payout is equal to $2,000,000. What is the expected value of the insurance payout?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M992319

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