A $250,000 building has a .10 probability of being destroyed completely, and there are no partial losses.The premium to insure the building is $30,000.Complete the decision matrix below to reflect the cost for each decision under each state.What are the values of X and Y?

State

Decision No Loss Loss

Insure X

Retain Y

(a) X = $3,000, Y = $25,000

(b) X = $30,000, Y = $250,000

(c) X = $30,000, Y = $25,000

(d) None of the above

9. A $250,000 building has a .10 probability of being destroyed completely, and there are no partial losses.The premium to insure the building is $30,000.Which of the following is true?

(a) The expected cost of retention is $250,000, and the expected cost of insurance is $30,000.

(b) The expected cost of retention is $25,000, and the expected cost of insurance is $30,000.

(c) The expected cost of retention is $25,000, and the expected cost of insurance is $3,000.

(d) None of the above