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
Burka [1]
3 years ago
12

You are considering buying one of two types of health insurance, both with the same premium. You guess that in the next year the

re is a 1 percent chance of serious illness that will cost you $67,500 in health care, a 9 percent chance of a moderate illness that will cost you $2,500, and a 90 percent chance of regular health care needs that will cost you $500. One type of health insurance is emergency-only coverage; it will cover your expenses for serious illness but not moderate illness or regular care. The other type covers moderate illness and regular expenses, but its payout is capped, so it will not cover the cost of a serious illness.
Required:
a. What is the expected value of payouts from the emergency-only insurance? $.
b. What is the expected value of payouts from the capped-coverage insurance? $.
c. Which is the more risk-averse option?
Business
1 answer:
dybincka [34]3 years ago
8 0

Answer and Explanation:

The computation is shown below:

a. The expected value of payout arise from emergency is

= 0.01 × $67,500

= $675

b. The expected value of payout arise from capped coverage insuance is

= (0.9 × $500) + (0.09 × $2,500)

= $675

c. The risk averse shows the minimum exposure with respect to the swings of the income or there would be the loss in the income. Since the payout amount is same in both the cases so here we considered option B

You might be interested in
An example of a non-traditional seller can be?
kvv77 [185]
D. all of the above because all are not physical retailers. Non-traditional sellers/retailers do their selling/business over the phone, on the internet, etc.
7 0
3 years ago
Read 2 more answers
1.
borishaifa [10]
The Pawnshop would be the highest risk for the customer.
8 0
3 years ago
Read 2 more answers
Ahrends Corporation makes 46,000 units per year of a part it uses in the products it manufactures. The unit product cost of this
IgorC [24]

Answer: 49.10 pee unit

Explanation:

Direct materials = $14.30

Add: Direct labor = 23.90

Add: Variable manufacturing overhead = 3.00

Add: Avoidable overhead = 28.30 - 28.40 = 0.10

Avoidable cost = 41.10

The maximum amount that the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 53,000 units required each year will be:

= 41.10 × 53000 + 424,000 / 53000

= 49.1 per unit

6 0
3 years ago
Lebron received $51,900 of compensation from his employer and he received $455 of interest from a municipal bond. What is the am
neonofarm [45]

Answer:

gross income amount = $51,900

Explanation:

given data

received compensation = $51,900

received interest from municipal bond = $455

solution

we get here amount of Lebron's gross income  that is

gross income amount = only received compensation here

receive interest from municipal bond is not consider here for gross income

so here gross income amount will be only here

gross income amount = $51,900

5 0
3 years ago
If the nominal interest rate is 18 percent and the real interest rate is 8 percent, the inflation rate is
Kamila [148]

Based on the nominal interest rate and the real interest rate, the inflation rate must be 10%.

<h3>What is the inflation rate?</h3>

The inflation rate is the difference between the nominal rate and the real interest rate.

It can be found as:

= Nominal rate - Real interest rate

Solving gives:

= 18% - 8%

= 10%

In conclusion, the inflation rate is 10%.

Find out more on inflation rates at brainly.com/question/25877453.

6 0
2 years ago
Other questions:
  • Engineers at a tire manufacturing company investigated the effect of a new rubber compound on the tire life of a certain brand o
    7·1 answer
  • Victoria is creating a brochure for her photography studio. She designed the layout and placed a photo in the center of the page
    8·1 answer
  • Real GDP per capital is found by A.dividing population by real GDP. B.dividing real GDP by population C. Subtracting population
    9·1 answer
  • In which of the following situations is having a good credit score important
    15·1 answer
  • Codes that are too detailed encourage employees to substitute rules for judgment.
    11·1 answer
  • Harold is an aspiring entrepreneur. He has asked all his professional contacts for some advice. After hearing out all the sugges
    8·1 answer
  • A new operating system for an existing machine is expected to cost $570,000 and have a useful life of six years. The system yiel
    7·1 answer
  • Annabey Inc., a small candy manufacturing company established in 1937, now has several large units that sell unique flavors of c
    10·1 answer
  • How should wildlife species like grouse or deer be valued, and how should that value be balanced against the economic interests
    13·1 answer
  • What is 35% off $116.09?​
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!