Lee College insures its students for thefts up tp $1000. The college
makes no profit, but sets the premium to cover administrative costs of
10 per cent on an average claim of $120. If the annual premium per
student is $24, what is the expected number of thefts per 100 students
P.S. The answer is D... but why?
Where is the question taken from ? I'd solve like this:
(premium/admin costs) = (number of thefts / student)
(24/120*10%) = (24/12) = 2 thefts / student, so I would say there should be 200 thefts per 100 students.
Be happy to se other people's answers !