Calculate the actuarially fair insurance premium for each

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Andy and Bobbi each have a job that pays $100,000 per year. Andy has a 5% chance of contracting an illness that would allow him to only make $60,000 next year while Bobbi has a 10% chance. (i) calculate each person's expected income for next year. (ii) if each could insure against an income reduction in the event of illness, calculate the actuarially fair insurance premium for each.

Reference no: EM131094692

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