Chapter 9 Risk Aversion and Risk Management by Individuals and Corporations I.Multiple Choice 1.The study underlying force that motivates individuals to purchase indemnification even though insurance insurance agiotages exceed pronounce claim costs is: a.profit b. danger aversion c.expect passing gamees d.premium warheads arrange: b eccentric: K 2.An individuals pauperization for insurance dep deceases on all of the following factors keep show up: a.income b.wealth c.premium make full d.portfolio return issue: d subject: K 3.Suppose that you have $20,000 in wealth and face a 20% chance of losing $10,000. Without insurance, your mathematical wealth outcomes are: a.$20,000, $18,000 b.$20,000, $10,000 c.$10,000, $2,000 d.$20,000, $18,000 dissolve: b Type: A 4.Using the corresponding scenario in principal #3, what is the evaluate value of your wealth without insurance? a.$20,000 b.$10,000 c.$18,000 d.$16,0 00 Answer: c Type: A 5.Using the same scenario in Question #3, if you purchase $10,000 in insurance coverage for a set of $2,500, what are your possible wealth outcomes? (Assume that the premium would be pay at the end of the class and that the harm would occur at the end of the year so that you can ignore the meter value of money.) a.$20,000, $10,000 b.$17,500 c.$17,500, $7,500 d.$18,000 Answer: b Type: A 6.An example of a non-monetary loss is: a.childrens funeral costs b.damage to your automobile which isnt covered by your insurance c.pain and suffering d.loss of time at work Answer: c Type: A 7.Suppose that an insurance company views Jennifer as having the following diffusion for the present value of losses: discharge =$10,000with opportunity .10 $2,000with probability .20 $500with probability .50 $0with probability .20 What is the fair premium for full coverage if the insurers competitive loading for administrative costs a nd capital costs is 10% of expected discount! ed claims? a.$1,815...If you want to get a full essay, order it on our website: OrderCustomPaper.com
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