QUESTION 1 Christina owns a condo in South Padre Island. She is considering buying ood insurance for her condo since her home owners' policy does not cover ood damage. There is a 20% chance that a hurricane will hit the island, causing $100,000 of damage to her condo. Because she is risk averse, she would pay up to $1,000 more than her expected losses for ood insurance. What would be the maximum price she would pay for coverage? |:l QUESTION 2 Would a risk neutral insurance company sell her insurance for $20,500 0 No, a risk neutral insurance company would not sell her insurance at any price hurricanes are too risky. Only a riskloving insurance company would sell insurance. 0 No, a risk neutral insurance company would not sell insurance unless she paid at least $21 ,000 0 Yes, a risk neutral insurance company would sell her insurance for any price greater than $13,000 0 Yes, a risk neutral insurance company would sell her insurance for any price greater than $20,000 0 Yes, a risk neutral insurance company would sell her insurance for any price greater than $20,500