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Simple Proft CommissionExample Answer: The expected cost o proft commission is

not zero Why: Because !" is the expected loss ratio#

$ There is a pro%a%ility distri%ution o potentialoutcomes around that !" expected loss ratio#

$ &t is possi%le 'and may e(en %e li)ely* that theloss ratio in any year could %e less than +!"#