Solution-Calculate a fair premium for home insurance

Calculate a fair premium for home insurance

Reference no: EM133184602

Question - Refer to the following table:

Loss	Probability	Value of Loss	Wealth
None	0.98	0	1,400,000
Car only	0.017	80,000	1,320,000
Home only	0.002	870,000	530,000
Both	0.001	950,000	450,000

Required -

a. Calculate a fair premium for car insurance.

b. Calculate a fair premium for home insurance.

c. Calculate total wealth after both insurances have been purchased.

Reference no: EM133184602

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Calculate a fair premium for home insurance

Reference no: EM133184602

Reference no: EM133184602

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