Question
In: Economics
Suppose Mr. Lin would like to some insurance for his property. The value of property is...
Suppose Mr. Lin would like to some insurance for his property. The value of property is one 100000 $. The probability of having fire is 0.01, which may totally destroy the value. Mr. Lin can hire an agent to take care of his property and entirely remove the risk, with the cost of 0.5% of the value of property.
a). (10 points) If Mr. Lin does not have any insurance for his property, does he want to hire an agent to take care of his property?
b). (10 points) Now suppose an insurance company offers a full insurance with premium 2000 $ to Mr. Lin. Does he want to buy the insurance before he hires the agent?
c). (5 points) If Mr. Lin bargains with insurance company and the insurance premium now is 100 $. After his purchase of insurance, does he want to hire the agent?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Assume that a risk manager would like to purchase property insurance on a building. She is...
Assume that a risk manager would like to purchase property
insurance on a building. She is analyzing two insurance coverage
bids. The bids are from comparable insurance companies, and the
coverage amounts are the same. The premiums and deductibles,
however, differ. Insurer A’s coverage requires an annual premium of
$70,000 with a $3000 per-claim deductible.
Insurer B’s coverage requires an annual premium of $25,000 with a
$9,000 per-claim deductible. The risk manager wonders whether the
additional $55,000 in premiums is...
Assume that a risk manager would like to purchase property insurance on a building. She is...
Assume that a risk manager would like to purchase property
insurance on a building. She is analyzing two insurance coverage
bids. The bids are from comparable insurance companies, and the
coverage amounts are the same. The premiums and deductibles,
however, differ. Insurer A’s coverage requires an annual premium of
$70,000 with a $3000 per-claim deductible.
Insurer B’s coverage requires an annual premium of $25,000 with
a $9,000 per-claim deductible. The risk manager wonders whether the
additional $55,000 in premiums is...
Your client would like to subdivide his property into 60-acre parcels. He owns the NE ¼...
Your client would like to subdivide his property into 60-acre
parcels. He owns the NE ¼ of section 12, and the S ½ of the NW ¼ of
section 12. Diagram a solution for the subdivisions?
Beaux just purchased homeowners insurance that has personal property coverage based on actual cash value. His...
Beaux just purchased homeowners insurance that has personal
property coverage based on actual cash value. His policy is more
expensive than if he had replacement cost coverage for his personal
property.
T OR F
Nick is applying for insurance with Security Insurance Company on certain pieces of his business property....
Nick is applying for insurance with Security Insurance Company
on certain pieces of his business property. In the application,
however, Nick fails to disclose various material facts that
Security Insurance Company does not know but has a right to know.
Nick has committed:
a. concealment.
b. fidelity.
c. misrepresentation.
d. waiver.
Eric's property was damaged in an accident. He phoned his agent to see if the loss was covered under his property insurance policy.
Eric's property was damaged in an accident. He phoned his agent to see if the loss was covered under his property insurance policy. The agent said, "As long as the cause of loss is not specifically excluded in the policy, the loss is covered." Based on the agent's answer, what type of insuring agreement appears in the policy? Extended-perils coverage Named-perils coverage Unconditional coverage "All-risks" coverage
An insurance company would like to offer theft insurance for renters. The policy would pay the...
An insurance company would like to offer theft insurance for
renters. The policy would pay the full replacement value of any
items that were stolen from the apartment. Some apartments have
security alarms installed. Such systems detect a break-in and ring
an alarm within the apartment. The insurance company estimates that
the probability of a theft in a year is 0.05 if there is no
security system and 0.01 if there is a security system (there
cannot be more than...
An insurance company would like to offer theft insurance for renters. The policy would pay the...
An insurance company would like to offer theft insurance for
renters. The policy would pay the full replacement value of any
items that were stolen from the apartment. Some apartments have
security alarms installed. Such systems detect a break-in and ring
an alarm within the apartment. The insurance company estimates that
the probability of a theft in a year is 0.07 if there is no
security system and 0.02 if there is a security system (there
cannot be more than...
Financial institutions in the U.S. economy Suppose Raphael would like to use $10,000 of his savings...
Financial institutions in the U.S. economy
Suppose Raphael would like to use $10,000 of his savings to make
a financial investment.
One way of making a financial investment is to purchase stock or
bonds from a private company.
Suppose RoboTroid, a robotics firm, is selling stocks to raise
money for a new lab—a practice known as (equity, debt) finance.
Buying a share of RoboTroid stock would (an IOU, or promise to pay,
from, or a claim to partial ownership in)...
1. Financial institutions in the U.S. economy Suppose Nick would like to invest $9,000 of his...
1. Financial institutions in the U.S.
economy
Suppose Nick would like to invest $9,000 of his savings.
One way of investing is to purchase stock or bonds from a
private company.
Suppose TouchTech, a hand-held computing firm, is selling stocks
to raise money for a new lab—a practice known as finance. Buying a
share of TouchTech stock would give Nick the firm. In the event
that TouchTech runs into financial difficulty, will be paid
first.
Suppose Nick decides to buy...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Make-or-Buy Decision Fremont Computer Company has been purchasing carrying cases for its portable computers at a...
- The following costs were incurred for the single product produced during the first year of operations...
- Non-constant growth model: Do=$2.00 required return on equity= 5% g= 9% n=1,2 g=7% n=3,4 g=3% n=5...
- . Find all x ∈ Z143 such that x2Ξ 7 (mod 143). Please explain all steps...
- #Python: A palindrome is a sequence of characters that reads the same backwards as forwards. For...
- Explain an example in which a variable has two different addresses at different places in a...
- Hadley, a thirty-five-year-old physician, has worked at Princeton Plainsboro Hospital for six years. She recently received...
ADVERTISEMENT