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instead of complete insurance as in exercise 4.5, you have a policy with a $5,000 deductible. What will your expected out-of-pocket spending be? What will
instead of complete insurance as in exercise 4.5, you have a policy with a $5,000 deductible. What will your expected out-of-pocket spending be? What will your expected insurance benefits be? Assuming that the premium equals 116 percent of expected insurance benefits, do you prefer the policy with the $5,000 deductible or the policy with complete coverage?
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