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Working on probability theory in an economics class. This was on of the practice problems that I'm struggling to back up with math. Any help would be appreciated! :)

  • An accident insurance company has reserves to cover claims on no more than 3 accidents. If all accidents have a probability of 0.01 of occurring, if all accidents are independent, and if the insurance company writes 100 policies, what is the probability that they will not have enough reserves?
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    @Andy: Have you tried anything so far? If so, it might be helpful to include it in your post.2010-11-10
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    Hint: Poisson distribution.2010-11-10

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