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Suppose Charlie earns $150,000 if she is healthy, and $80,000 if she falls ill. Suppose further that she has a 0.5% chance of falling ill.
Suppose Charlie earns $150,000 if she is healthy, and $80,000 if she falls ill. Suppose further that she has a 0.5% chance of falling ill. If Charlie were to purchase full insurance, the payout would be equal to___. The actuarially fair premium for this payout would be equal to ____.
A) $150,000; $750
B) $70,000; $350
C) $30,000; $450
D) $350; $70,000
E) $750; $150,000
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