Teddy is considering buying flood insurance. the cost of flood insurance is $400 per year. teddy predicts that there is a 20% chance that his house will flood and estimates that a flood will cause $1,000 in damages. if he gets insurance and there's no flood damage, he will lose his $400. however, if he gets insurance and there is flood damage, the insurance company will pay $1,000 for the damages. since teddy only paid $400 for the insurance, he will essentially save himself $600. what is the expected value of savings/losses for teddy buying insurance?

Expected payoff from insurance:

$1000*0.20 = $200

0*0.80=0

Expected payoff is $200

He pais $400 for insurance.

He gains only if there is a flood, but he has an expected loss of $200

apex verified answer < 3

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i really hope this < 3 < 3 < 3

anyone below or above ambitious can tell you. so crowns mean brainliest. getting brainliest means your answer needs a good explanation and the person asking the question can understand your answer easily. so say there's a multiple choice question. you don't just want to say your answer is a, hope it . provide evidence and reasoning so that they know that that is the correct answer. a good explanation should have evidence, good reasoning, and your opinion on why you picked that. you don't want to look up their question on the internet and see if you can answer it. pick questions that you 100% know the answer to, so than that way you can provide a better explanation.

best of luck,

the divergent