User Account

All Pages

Situation of an insurance company

Assignment Help Finance Basics
Reference no: EM131114393

Consider the situation of an insurance company which offers personal injury policies to professional hockey players. The typical payoffs to one of these policies are forecast to be the following:

State

Prob.

Payoff

Athlete is seriously injured

0.01

-5,000,000

Athlete is not injured seriously

0.99

60,000

What is the expected profit per policy? Assuming the returns are uncorrelated policy to policy, how many policies must be sold in order for the standard deviation of the firm's overall portfolio of injury policies to be below $10,000?

Reference no: EM131114393

Questions Cloud

Various inventory issues the following independent situation : What is Donovan's Inventoriable cost for 2010? Answer each of the preceding questions about inventories, and explain your answers.
What is different about asia compared to europe and america : For foreign exchange trading, what is different about Asia, compared to Europe and the America? Do you think that this difference is surprising?
Expected return and the variance of the return : What are the expected return and the variance of the return on an equally weighted portfolio of all N securities? Please, note that the variance is presented by the formula, which depends on N.
Dollar value lifo the following information relates : Dollar-Value LIFO The following information relates to the Choctaw Company. Use the dollar-value LIFO method to compute the ending inventory for Choctaw Company for 2007 through 2011.
Situation of an insurance company : Consider the situation of an insurance company which offers personal injury policies to professional hockey players. The typical payoffs to one of these policies are forecast to be the following:
Expected return to stock : The returns on stocks A and B are perfectly negatively correlated (). Stock A has an expected return of 21 % and a standard deviation of return of 40%. Stock B has a standard deviation of return of 20%. The risk-free rate of interest is 11 %. What..
Computing the financial ratios : How much can we actually learn by using financial ratios? After all, a ratio by itself does not convey much Is our cost of goods sold in check if it comprises 65% of sales? Is a profit margin of 18% sufficient? What do you think?
What is the population : What is the population? What is the sample? Classify the three variables as nominal, ordinal, discrete or continuous.
Company current dividend : A company's current dividend is $2.00 and will grow at 30% for the next three years. After this, it will grow at 6%. The required rate is 13% What is its current value? Additionally, if the stock is selling for $52.00, what would your recommendati..

Reviews

Write a Review

Finance Basics Questions & Answers

  Derive and explain the monetary approach to exchange rate

Derive and explain the monetary approach to exchange rate determination.

  Amount of capital spending for the past three years

Select a company (LG) and a competitor and access the last three years' annual reports. Using the annual reports of both companies, please answer 3 questions:

  How many hours will it take to complete grading operation

A motor grader requires two passes at 2 miles per hour, two passes at 3 miles per hour, and one pass at 4 miles per hour to accomplish the work; job efficiency is 0.80. How many hours will it take to complete the grading operation for the 2-mile p..

  Which security should be selected

The Shrives Corporation has $10,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds, which yield 7.5 percent, state of Florida mu ni bonds, which yield 5 percent, and AT&T preferred stock, with a dividend yield of 6 ..

  Financial statements are a major source of information

financial statements are a major source of information about a company. forecasts reports and recommendations from

  New steel products has total assets of 991000 a total asset

new steel products has total assets of 991000 a total asset turnover rate of 1.1 a debt-equity ratio of 0.6 and a

  The dividend is projected to increase at a constant rate

whited inc.s stock currently sells for 35.25 per share. the dividend is projected to increase at a constant rate of

  What is the price of a 10-year zero coupon bond paying 1000

what is the price of a 10-year zero coupon bond paying 1000 at maturity if the ytm isa. 5b. 10c.

  Pmt and nper functions in excel

At each question the solution cell must contain the Excel formula (Function) that produced the answer. Replace the existing numerical contents. Also add a brief explanation of how the answer was derived and the significance of the question in unde..

  Earned value management

Review the Fleming and Koppelman article from your assigned readings. Evaluate two of the ten EVM requirements and analyze how a project you have worked on in the past could have been more effective by using the measures.

  What is the firm flotation-adjusted cash flow

If your firm follows the practice of incorporating flotation costs into the project's initial investment, what is the firm's flotation-adjusted cash flow in year 0?

  Source of capital target market portfolio

Source of Capital Target Market Portfolio

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd