You own a house with a market value of $400,000. You have $150,000 in your liquid wealth.
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You own a house with a market value of $400,000. You have $150,000 in your liquid wealth. Your risk-aversion parameter is γ = 1. There is a 1% chance that a flood will occur and cause $50,000 in damage in a given year. Assuming that insurance companies make a 15% profit, how much is the insurance premium?
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Kirti Kaushal
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Related Book For 
Strategic Financial Planning Over The Lifecycle A Conceptual Approach To Personal Risk Management
ISBN: 9780521148030
1st Edition
Authors: Narat Charupat, Huaxiong Huang, Moshe A. Milevsky
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