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DochEvi [55]
2 years ago
12

An insurance company knows that the average cost to build a home in a new California subdivision is ​$92 comma 297 and that in a

ny particular year there is a 1 in 41 chance of a wildfire destroying all the homes in the subdivision. Based on these data and assuming the insurance company wants a positive expected value when it sells​ policies, what is the minimum the company must charge for fire insurance policies in this​ subdivision?
Business
1 answer:
Marrrta [24]2 years ago
5 0

Answer:

The minimum the company must charge for fire insurance policies in California​ subdivision is $2,252.

Explanation:

We have the chance of a wildfire destroying all the homes in the subdivision is: 1/41 or nearly 2.44%.

The minimum the company must charge for fire insurance and still maintain a positive expected value is calculated as:

The average cost to build a home in the subdivision * the chance of a wildfire destroying all the homes in the subdivision = 92,297 * 2.44% = $2,252.

So, the answer is $2,252.

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D. Serves as an initial evaluation of the adequacy of an investment's expected cash flows.

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Ratio analysis serves as an initial evaluation of the adequacy of an investment's expected cash flows.

Ratio analysis can be defined as the analysis of different pieces of financial information in the financial statements of a business.

Ratio analysis is used to get insight about the financial wellbeing of a business. It is used by analysts to determine various aspects of a business, such as its profitability, liquidity, and solvency.

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J&J Foods wants to issue 5.4 percent preferred stock with a stated liquidating value of $100 a share. The company has determ
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Answer:

$65.85

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Which estimating technique uses a statistical relationship to calculate cost or duration based on historical data and other proj
Yuliya22 [10]

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Why does the government plan its financial expenditure framework for a period of five years?
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