Discussion: If you post your answers to each of the three questions below before the deadline, you will get the full ten points for the discussion. The questions do not need to be answered mathematically or with a calculation. If you feel the need to use mathematics to make a calculation, then you are free to do so but the questions are merely asking you for a number and how you arrived at that number. If you do not do any calculations to arrive at the number, just say how you arrived at the number. (There are no incorrect answers.) Discussion question 1: If you purchased insurance in decision 1, what would be the maximum number of points you would have paid to purchase insurance? Explain how you arrive at this number. If you did not purchase insurance, at what price would you be willing to purchase insurance? Explain how you arrive at this number. Discussion question 2: For this question I want you to think of yourself as the insurance company which is selling insurance. If you knew the data from decision 1, what would be the minimum price you would sell insurance at? Explain how you arrive at this number. Discussion question 3: Again, for this question I want you to think of yourself as the insurance company which is selling insurance. Given the information from decision 2 and assuming that people know if they are sick or healthy, what would be the minimum price you would sell insurance at in this market? Explain how you arrive at this number. Some details about these questions Question 1 is a straightforward question and you only need to think about your own preferences to come up with an answer. Since the answer depends on your own risk-preferences, there are no incorrect answers. You should also think about what the actuarially fair price for this insurance is but you are not required to calculate that in this discussion. Questions 2 and 3 are more defined business questions. I am not grading the correctness of your answers merely that you attempt to answer the questions. This forces you to think like a risk manager which, as the textbook points out, is a business manager. You must think like a business person to be a good risk manager and these questions forces you to think about the topic of insurance as if you were trying to run a business. At the completion of the module I will follow up with a post-module wrap-up which will outline how a business person can go about thinking about questions 2 and 3. This is a good opportunity for those of you who have made it through much of the MBA curriculum to test your knowledge in finance and management to see if you can come up with a plan to answer questions 2 and 3. For those of you who have not taken much of the MBA curriculum, or have not had a sufficient amount of business training, this is a good introduction to start thinking about business topics like insurance and management.