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What full insurance preferred to deductible insurance

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Reference no: EM132694556

A clothing manufacturer is considering the following 4 options to handle the risk they face with the following respective costs:

Retention

  • Expected Cost of 600

Partial insurance 

  • Expected Cost of 800

Deductible insurance

  • Expected Cost of 900

Full insurance

  • Expected Cost of 1000

Problem a. If the risk manager makes decisions by minimizing TOTAL COST, show what conditions on the WVs would make:

  1. Full insurance preferred to Deductible Insurance? Show all work and explain the numerical answer. 
  2. Partial insurance preferred to Retention?

Reference no: EM132694556

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