1.State Farm receives a one-year hurricane insurance premium today of $1,750 from a family in Florida.If there is a hurricane this season and the family's home is damaged, this insurance policy will pay for all the repairs.Their home is valued at $250,000.Repairs would cost on average a quarter of home value ($62,500 in this case).Assume repairs (if any) would be paid one year from today.There is a 1% chance of hurricane damage in any given year.If the required rate of return for State Farm is 5%, how does writing this policy change State Farm's wealth?

a)Decreases by $1,155

b)Decreases by $464

c)Wealth is unchanged

d)Increases by $464

e)Increases by $1,155