Originally Posted by

**lexietx** We are discussing random variables in class, but have only discussed theoretical application, and I am lost as to how to figure out word problems. Here is one from my homework:

An insurance company writes a policy to the effect that an amount of money *A* must be paid if some event *E* occurs within a year. If the company estimates that *E* will occur within a year with probability *p*, what should it charge the customer in order that its expected profit will be 10 percent of *A*?