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see the wrong answers , and give the right ones please also the empty gaps Neighborhood Insurance sells fire insurance policies to local homeowners. The
see the wrong answers , and give the right ones please
also the empty gaps
Neighborhood Insurance sells fire insurance policies to local homeowners. The premium is $360, the probability of a fire is 0.1%, and the event of a fire, the insured damages (the payout on the policy will be $350,000 a. Make a table of the two possible payouts on each policy with the probability of each. Answer is complete but not entirely correct. Outcome outcome Payout No Fire $ 380 Fire! 350,000 b. Suppose you own the entire firm, and the company issues only one policy. What are the expected value, variance and standard deviation of your profit? 3 Answer is complete but not entirely correct. Expected Variance Return 101 22629377 Standard Deviation 11073 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 their associated probabilities. (Round your "Probability answers to 4 decimal places.) Outcome No Fire Answer is not complete. Outcome: Outcome: One Fire Two Fires $ (699,280) 0.1008 % 0.0001 720 Payout Probability 0.8001 % % d. What are the expected value, variance and standard deviation of your profit? Answer is complete but not entirely correct. Variance Standard Deviation Expected Return 20 244765000 e. Compare your answers to (b) and (d). Did risk pooling increase or decrease the variance of your profit? Answer is complete and correct. Risk pooling increased the total variance of profit. 1. 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 Outcome: One Fire Outcome: Two Fires Payout Probability 9. What are the expected value and variance of your profit? Expected Variance Returna tore Standard Deviation Step by Step Solution
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