Question: an insurance company knows that in the entire population of millions of homeowners, the mean annual loss from fire is 250. and the standard deviation of loss is 1,000. the distribution of losses is strongly right skewed. most policies have a 0 loss, but few have large losses. if the company sells 1,000 policies, can it safely base its rates on assumption that its average loss will be no greater than 275?
i think im supposed to use the central limit thereom. step by step please Edit
Answer: Test statistic, z= (x bar - mean)/(sd/sqrt(n))
Need to find p(x bar<275)=?
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