Question
Case 3: Suppose Emily has the same loss distribution as Sam and Jack. Emily, Sam and Jack pool risk together and each pays 1/3 whenever
Case 3: Suppose Emily has the same loss distribution as Sam and Jack. Emily, Sam and Jack pool risk together and each pays 1/3 whenever the other one experiences a loss. Which of the following is FALSE?
A) The expected loss per person of Case 3 is the same as that of Case 2.
B) The standard deviation of the aggregate loss of Case 3 is lower than that of Case 2.
C) The expected aggregate losses of Cases 2 and 3 are different.
D) The expected aggregate loss of Case 3 is higher than that of Case 2.
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Frank Woods Business Accounting An Introduction To Financial Accounting
Authors: Alan Sangster, Lewis Gordon, Frank Wood
15th Edition
1292365439, 9781292365435
