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Calculate a fair premium for home insurance

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Reference no: EM133184602

Question - Refer to the following table:

Loss

Probability

Value of Loss

Wealth

None

0.98

0

1,400,000

Car only

0.017

80,000

1,320,000

Home only

0.002

870,000

530,000

Both

0.001

950,000

450,000

Required -

a. Calculate a fair premium for car insurance.

b. Calculate a fair premium for home insurance.

c. Calculate total wealth after both insurances have been purchased.

Reference no: EM133184602

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