8. The claim cost of an insurance company follows a normal distribution with an

expec

ted value of $500 million and a standard deviation of $100 million. Based on the

above, work on the following questions.

A) In the graph, indicate the probability of insolvency of the insurer when it has an asset

of $750 million. Please clearly label the a

xes.

B) Show the probability of insolvency of the insurer after the insurer raises $100 million

of new

capital.

C) Compute the probabilities of insolvency for the insurer when its total assets are

respectively $750 and $850 million.

D) What is the firm's

value at risk at the 1% level?