You buy an insurance policy on your car. The contract represents that, if the car has...

You buy an insurance policy on your car. The contract represents that, if the car has incurs more than $500 worth of damage, the insurance company will pay for the amount of the bill in excess of that amount. Which statement below is most accurate?

A. You are the issuer of a put option, and the insurance company is the purchaser of that put option.

B. You are the buyer of a call option, and the insurance company is the seller of that call option.

C. You are the purchaser of a put option, and the insurance company is the seller of that put option.

D. You are the seller of a call option, and the insurance company is the buyer of that call option.

Which of the following is false about hedge funds?

A. They are heavily regulated.

B. They use private sources of capital.

C. The compensation to their managers is performance-based.

D. They are illiquid.

Expert Solution

B: You are the buyer of the call option, and the insurer company is the seller of that call otion.

A call option gives the right to buyer to exercise his right if the damages are more than $500. The insurance company being th seller is obligated to pay for the damages.

A: They are heavily regulated

Hedge funds are not heavily regulated.

jeff jeffy answered 2 years ago

Should Individuals buy Health Insurance as they buy Car Insurance? Post your response in four paragraphs please.

Explain why hedging is like buying an insurance policy. To buy an insurance policy, you need...

Explain why hedging is like buying an insurance policy. To buy an insurance policy, you need to pay a premium; what is the corresponding premium in hedging? Give an example to clarify your answer.

You want to buy a new sports car for $50,000. The contract is in the form...

You want to buy a new sports car for $50,000. The contract is in the form of a 60-month annuity due at a 7.2 APR. What will your monthly payment be? Answer =. $988.85 but I keep getting $994.78 how do I get 988.85

Every insurance contract has a set of declarations. The declarations of a typical insurance policy include...

Every insurance contract has a set of declarations. The declarations of a typical insurance policy include all of the following information EXCEPT A. exclusions B. name of the insured C.name of the insurer D. effective date

Suppose a car insurance company sells you an insurance policy that “gets you legal” and costs...

Suppose a car insurance company sells you an insurance policy that “gets you legal” and costs $7.50 per month. What is the problem with this insurance policy? What does it mean to have only 25/50/25 liability coverage for the following situations (what could the insurance company pay)? a. If you hit someone (you are at fault)? b. If someone hits you (they are at fault) and is insured? c. If someone hits you (they are at fault) and is not...

You want to buy a new sports car from Muscle Motors for $34,000. The contract is...

You want to buy a new sports car from Muscle Motors for $34,000. The contract is in the form of a 60-month annuity due at a 9.75 percent APR. What will your monthly payment be? ANS: - $698.19 - $712.44 - $726.68 - $718.22 - $676.81 Which one is the correct answer?

You want to buy a new sports car from Muscle Motors for $58,000. The contract is...

You want to buy a new sports car from Muscle Motors for $58,000. The contract is in the form of a 48-month annuity due at a 6.50 percent APR. Required: What will your monthly payment be? $1,395.42 $1299.65 $1,340.70 $1,368.06 $1,375.47

You own a house that cost $200000 to build. You buy a $15000 insurance policy to...

You own a house that cost $200000 to build. You buy a $15000 insurance policy to compensate you for damage to the house. The deductible $25000.(If your house suffers $4000 damage from a storm, you pay for all repairs yourself. If the house suffers $45000, in damage, you pay$25000 and the insurance company pays the remaining $20000.) Graph the positions of the unhedged home, the home insurance and the hedged home position on the profit and loss diagram. In the...

If you buy an insurance policy with a low deductible and no co-payments, you would end...

If you buy an insurance policy with a low deductible and no co-payments, you would end up paying a higher premium a lower premium the premium of a low risk individual a. A higher premium b. A lower premium c. The premium of a low risk individual d. Both B&C

When you buy an HO policy, you should purchase enough insurance to pay for ______ of...

When you buy an HO policy, you should purchase enough insurance to pay for ______ of the cost of replacing your dwelling and your personal property. 100%. 80%. 50%. 120%.

Question