Answered: There is a chance that the things you… | bartleby

Personal Finance

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter10: Managing Property And Liability Risk

Section: Chapter Questions

Problem 2DTM

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Question

2

There is a chance that the things you own,
like your computer, phone, clothes etc. are
lost due to burglary, fire, or flooding.
Renter's insurance promises to replace
these things. If there is a 1% chance
(p=0.01) that you lose $5,000 of property
during the next year, what is an actuarially
fair premium for such an insurance policy?
a. $1
b. $50
c. $100
d. $500
e. $5,000

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