Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

thanksssssss A corporation is seeking fleet-insurance on its delivery vehicles. The actuarial estimation of the costs of providing the insurance are $2 million a year

thanksssssss

image text in transcribed
A corporation is seeking fleet-insurance on its delivery vehicles. The actuarial estimation of the costs of providing the insurance are $2 million a year (average payouts to be made). What do you expect the corporation will pay for the insurance in a perfectly efficient market and why? O A. We expect they will pay at the actuarial cost of the insurance because they are risk neutral and would not tolerate a premium. O B. We expect that they will pay the actuarial cost of the insurance because they are risk-avoiding and must acquire insurance to protect their fleet of vehicles. O C. We expect they will pay slightly below the actuarial value of $2 million per year because a corpora always profit maximizes. O D. We expect they will pay above the actuarial cost because the firm is concerned about the risk of damage to their fleet of cars

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Research Methods Design And Analysis

Authors: Larry Christensen

13th Edition

0205961258, 978-0205961252

More Books

Students also viewed these Economics questions

Question

whats the best loyalty program to maximize the profit on business

Answered: 1 week ago

Question

6. How can hidden knowledge guide our actions?

Answered: 1 week ago

Question

7. How can the models we use have a detrimental effect on others?

Answered: 1 week ago