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please show all the works ... Thanks this is one question with all three parts Neighborhood insurance sells fire Insurance policies to local homeowners. The
please show all the works ... Thanks
Neighborhood insurance sells fire Insurance policies to local homeowners. The premium is $280, the probability of a fire is 0.1%, and in the event of a fire, the insured damages the payout on the policy will be $270,000 a. Make a table of the two possible payouts on each policy with the probability of each Outcome A: Outcome policy. What are the expected valve, variance and standard b. Suppose you own the entire firm, and the company issues only deviation of your profit? Variance c. Now suppose your company issues two policies. The risk of fire is independent across the two policies. Make a table of the three possible payouts along with the associated probabilities. Round your "Probe answers to 4 decimal places Prey 22 22 Next 22 d. What are the expected value, variance and standard deviation of your profit? Expected Return Expected Standard Variance Delation points e. Compare your answers to (b) and (d), Did risk pooling increase or decrease the variance of your profit? Risk pooling the total vari so that you each own one-half of Continue to assume the company has issued two policies, but now assume you take on a partner, so that you each own one-half of the firm. Make a table of your share of the possible payouts the company may have to make on the two policies along with their associated probabilities. (Round your "Probability answers to 4 decimal places.) Outcome No Fire Dutcome: One Fire Outcomes Two Fires Payout Proba g. What are the expected value and variance of your profil this is one question with all three parts
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