1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
IgorLugansk [536]
3 years ago
14

Rosa has a 10% chance of getting sick in the next year. If she gets sick, her medical bills will amount to $500. She has a wealt

h of $1,000. Suppose she has the utility function u(x) = x0.5, where x is her net wealth at the end of the year.
(a) Calculate Rosa’s risk premium.

(b) What is the most that Rosa is willing to pay for an insurance policy that fully covers against her loss?

(c) Some insurance policies have deductibles. A deductible is an amount of a claim not covered by insurance; it’s a fixed portion of the medical bills that the insured person must pay in order to make a claim to their insurer. Suppose Rosa’s insurance company provides two plans. Plan A has zero deductibles (good!) but charges a high premium (bad!). Specifically, Plan A charges $55 for $500 of coverage. Plan B has a deductible of $K, where K<500, but charges a premium of just $(55 – .1K). Suppose K =b $300. Will Rosa purchase insurance and, if so, which plan? Show this mathematically.
Business
1 answer:
wlad13 [49]3 years ago
8 0

a) In layman's language, Risk Premium is the premium that an individual will get because of taking risks. As in this case, if Rosa is taking a risk of not getting Insured while there is a 10% chance of getting ill in the next year. If she does not get ill in the next year than what ever she saved by not paying the insurance premium is her risk premium.

If she takes a rsik of not paying the premium then she has a chance of losing out $500 & not getting anything financially from this loss while on the other side she has only 10% chance for this.

b) I think, Rosa is willing to pay $55 for her $500 coverage as if there are 10% chances of her getting ill & she is looking at the selective problems being covered in the Plan B then there is further risk enhancement that whatever problem is there with her might be or might not be covered under the insurance policy. so, It is better to go with an expensive but zero deductible plan.

c) Rosa, if takes a plan should go for Plan A which is charging $ 55 but there are zero deductible while Plan B $300 are deductibles & the charges are $ 25 (assuming what is given in the question.) for covering $ 200 (apart from the deductibles) .

You might be interested in
11. If you saw an employee take damaged merchandise that had been thrown away, what would
goldfiish [28.3K]
The answer they're looking for is that you will tell a supervisor. If the question ever involves theft or mistreatment of customers they always want to hear that you'll report the person.
8 0
3 years ago
When reducing project duration, the duration for a project that is optimal is at the point where Select one: a. Direct costs are
Free_Kalibri [48]

Answer:

The correct answer is the option D: Total project costs are the lowest.

Explanation:

To begin with, when it comes to the business field and the management area, the "project duration" refers basically to the characteristic that the project management has regarding the duration of it, very commonly expressed in terms of working units like hours, days, weeks, months or years for example. Moreover, there are three major types of project duration that are: "Estimated Project Duration", "Actual Project Duration" and "Remaining Project Duration". And to end up, the point where the duration of the project is opmital is when the total project costs are the lowest of all.

8 0
2 years ago
Being debt free within the next 15 years is an example of which goal
marishachu [46]
I agree with the person above - being debt free within the next 15 years in an example of a long-term goal.
A short-term goal would involve hours, days, or even months. But here, we're talking about years, at least 15 of them, which is a long time during which many things can change. So it is definitely a long-term goal, given that it won't expire any time soon.
4 0
2 years ago
Read 2 more answers
Jade is concerned about her risk of osteoporosis. to help reduce her risk of this condition, jade should ________.
Alexandra [31]
The correct answer is Physical Activity Level.

Physical Activity Level or also known as PAL is best described as a way to explicit a person's daily physical hobby as quite a number, and is used to estimate a person's overall strength expenditure. In combination with the basal metabolic rate, it could be used to compute the amount of food power someone needs to eat so as to keep a selected way of life.
3 0
3 years ago
Read 2 more answers
Kroger sponsors such brands as Private​ Selection, Heritage​ Farm, and Simple Truth. Kroger does not manufacture any of these pr
malfutka [58]

Answer: A. A Private Brand

Explanation:

In Private Branding, a company manufactures goods for another company to sell under their own brand. Such goods are usually known to be cheaper than their branded equivalents.

Examples include grocery store goods that bear the name of the grocery store selling them.

8 0
3 years ago
Other questions:
  • Is the establishment of the 200-mile limit a sufficient form of government intervention to ensure that the "tragedy of the commo
    6·1 answer
  • Suppose the U.S. economy slips into a recession. In response, the Federal Reserve cuts the federal funds rate in order to avoid
    7·1 answer
  • A manufacturing company that produces a single product has provided the following data concerning its most recent month of opera
    13·1 answer
  • Blue Dingo uses a standard costing system. The company's standard costs and variances for direct materials, direct labor, and fa
    12·2 answers
  • In denim fabric what do you call the yarn that runs vertically
    7·2 answers
  • The following items are found in the financial statements.
    7·1 answer
  • In un sistema economico l’offerta di lavoro da parte delle famiglie `e fissa e pari a Ls = 9. Nel sistema operano 100 imprese id
    8·1 answer
  • PLS HELP!!! THANK U<br> Sample Work: Writing an Informative Essay: Prewriting BATTLING ADVERSITY
    8·2 answers
  • Question 7 (3 points)
    14·1 answer
  • A marketing strategy that enhances the shopping experience for experiential shoppers is called ________.
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!