Question: Allen & Associates write weekend trip insurance at a very nominal charge. Records show that the probability a motorist will have an accident during the weekend and will file a claim I quite small (.0005). Suppose Alden wrote 400 policies for the forthcoming weekend.

Compute the probability that exactly two claims will be filed using equation

on page 218.

Note: The symbol λ is the mean (expected value) which we used as μ = np on page 210. So λ is nothing more than the mean number of occurrences (successes = np) in a particular interval.

Get the probability that the number of claims is 0, 1, 3 & 4 from Table III in back of text. Explain how you arrived at each value from the table.