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Sarah's wealth is $150,000. Pr (sick) = 0.25 Cost of being sick is $5000 1.Calculate the actuarially fair premium 2. calculate the loading factor (if

Sarah's wealth is $150,000.

Pr (sick) = 0.25

Cost of being sick is $5000

1.Calculate the actuarially fair premium

2. calculate the loading factor (if insurance company charged premium = expected utility without insurance)

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