MathCastle
Statistics & DataChallengeRandom Variables

Random Variables · Challenge problem

A driver's yearly collision loss LL is $0\$0 with probability 0.90.9, $500\$500 with probability 0.060.06 and $2000\$2000 with probability 0.040.04. A policy with deductible dd (where 0<d<5000 < d < 500) pays L−dL - d whenever L>dL > d and nothing otherwise. What deductible dd, in dollars, makes the expected payout of the policy exactly $70\$70?