Person A faces an 80% chance of having no loss and a 20% chance of having a loss of $50. Person B faces an 80% chance of having no loss and a 20% chance of having a loss of $100. Question 1: Suppose Person A purchases full insurance for an actuarially fair premium (AFP) and Person A is the ONLY person in the insurer's risk pool: a. What is the actuarially fair premium (AFP) of ful insurance for Person A? b. What is the amount of risk the insurer faces?
Person A faces an 80% chance of having no loss and a 20% chance of having a loss of $50. Person B faces an 80% chance of having no loss and a 20% chance of having a loss of $100. Question 1: Suppose Person A purchases full insurance for an actuarially fair premium (AFP) and Person A is the ONLY person in the insurer's risk pool: a. What is the actuarially fair premium (AFP) of ful insurance for Person A? b. What is the amount of risk the insurer faces?
Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter2: Systems Of Linear Equations
Section2.4: Applications
Problem 28EQ
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