[4c-04] an insurance policy reimburses a loss with a deductible of 5. that is, if a loss is less than 5, policy will pay zero. if it is more than 5, then the policy will pay (loss - 5). the policyholder's loss, y, follows a distribution with density function: f(y) = 2y^-3 for 1 < y and 0 otherwise what is the expected value of the benefit paid under the insurance policy? (use 2 decimals)

-3

Step-by-step explanation:

Given that an  insurance policy reimburses a loss with a deductible of 5. That is, if a loss is less than 5, policy will pay zero. If it is more than 5, then the policy will pay (loss - 5).

We have distribution of y as

expected value of the benefit paid under the insurance policy

=, by linearity property of expectation.

Hence expected value of the benefit paid under the insurance policy

=2-5 =-3

step-by-step explanation: