49. An insurance company sells a one-year automobile policy with a deductible of 2. The
probability that the insured will incur a loss is 0.05. If there is a loss, the probability of a
loss of amount N is K/N, for N = 1, . . . , 5 and K a constant. These are the only possible
loss amounts and no more than one loss can occur.
Calculate the expected payment for this policy.
(A) 0.031
(B) 0.066
(C) 0.072
(D) 0.110
(E) 0.150
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