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8090 [49]
3 years ago
6

Suppose you found out that the Japanese are on the verge of introducing their own mayonnaise substitute next month. Sam does not

know this and has just turned down your final offer for the insurance. Assume that Sam tells you SCAM is only six months away from perfecting its mayonnaise substitute and that you know what you know about the Japanese. Would you raise or lower your policy premium on any subsequent proposal to​ Sam? Based on his​ information, would Sam​ accept? A. You would raise your policy premium substantially and Sam would not accept because he​ doesn't know about the Japanese. B. You would raise your policy premium substantially and Sam would accept because the higher premium would signal there was a greater chance of a loss. C. You would not offer Sam a policy at any premium because given the new​ information, Sam will almost certainly sustain a loss.
Business
1 answer:
fiasKO [112]3 years ago
4 0

Answer: A. You would raise your policy premium substantially and Sam would not accept because he​ doesn't know about the Japanese.

Explanation:

In such a scenario as the one described above, the best option as an Insurance Agent is indeed to raise premiums substantially.

As the Japanese will most probably get to market first with the new Mayonnaise Substitute, they will have the rights to it's invention and could even patent it.

This means that Sam and SCAM will most likely suffer a loss as a result of this.

As there is such a high chance of loss, charging a substantially higher premium to enable coverage is only logical and makes business sense.

Sam does not know however that the Japanese are so far ahead and having rejected a substantially lower offer, will reject the newer, substantially higher one as well.

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frutty [35]

Answer:

SD = 0.0740270 or 7.40270 percent rounded off to 7.403 percent

Explanation:

To calculate the standard deviation of the investment, we must first calculate the expected or mean return of the investment. The expected or mean return can be calculated as follows,

r = pA * rA  +  pB * rB  +  ...  +  pN * rN

Where,

  • pA, pB, ... represents the probability of state occurrence
  • rA, rB, ... represents return A, return B and so on  under each state

r = 0.2 * 0.16  +  0.4 * 0.12  +  0.2 * 0.05  +  0.2 * -0.05

r = 0.08 or 8%

The formula to calculate the standard deviation of a stock/investment is as follows,

SD = √pA * (rA - r)²  +  pB * (rB - r)²  +  ...  +  pN * (rN - r)²

SD = √0.2 * (0.16 - 0.08)²  +  0.4 * (0.12 - 0.08)²  +  0.2 * (0.05 - 0.08)²  +  0.2 * (-0.05 - 0.08)²

SD = 0.0740270 or 7.40270 percent rounded off to 7.403 percent

4 0
3 years ago
Shelton Co. purchased a parcel of land six years ago for $866,500. At that time, the firm invested $138,000 in grading the site
nikklg [1K]

Answer: $918,000

Explanation: Since Shelton Co is considering building a warehouse on the site because the rental lease is expiring then in  evaluating the new project all the relevant cash flows must be considered in  the protect evaluation. Market value of the land used for constructing the building is an opportunity cash flow and so must  be considered.  The Relevant cost of opportunity for land will be its fair value.

Therefore ,the initial cost cost of the warehouse project for the use of this land is $918, 000.

5 0
3 years ago
Read 2 more answers
Other things equal, the monopsonistic employer will pay a
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Answer: The correct answer is "a. lower wage rate and hire fewer workers than will a purely competitive employer.".

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5 0
2 years ago
On March 31. 2019, Home Decorating Pavilion received a bank statement showing a balance of $9,810. The balance in the firm's che
NNADVOKAT [17]

Answer:

Both requirements 1 and 2 are the same, but I guess one refers to a bank reconciliation statement and the other one to a cash account reconciliation.

Bank account reconciliation:

bank balance $9,810

+ deposits in transit $2,935

- outstanding checks 358 and 359 ($2,225)

<u>+ check deducted by mistake $590</u>

reconciled bank account $11,110

Cash account reconciliation:

Cash account balance $10,276

+ note and interest collected $1,320

- bank fees ($31)

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<u>+ error on check 341 $100        </u>

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3 0
3 years ago
Which of the following elements is exclusive to the services marketing mix, and not the traditional marketing mix?a) processb) p
Romashka-Z-Leto [24]

Answer:

a) process

Explanation:

The P's are Product, Pricing, Place, Promotion, People, Process and Physical Evidence and for Traditional Marketing is Product, Pricing, Place and Promotion

7 0
3 years ago
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