User Account

All Pages

Insurance policy-utility function

Assignment Help Accounting Basics
Reference no: EM1317192

Your current disposable income is $90,000. Suppose that there is a 1% chance that your house may burn down, and if it does, the cost of repairing it will be $80,000, reducing your disposable income to $10,000. Suppose that your utility function is U = √I

(a) Would you be willing to spend $500 to purchase an insurance policy that would fully insure you against your loss?

(b) What is the highest price that you would be willing to pay for an insurance policy that fully insures you in the event that your house burns down?

Reference no: EM1317192

Questions Cloud

Developing a single neural network : The team member A proposes that you must develop a single neural network which may handle all these stocks. However the member B insists that you have to design the five networks (one for each stock).
Calculating correlation coefficient for sample data : Calculate correlation coefficient for these sample data.
Changes in income and price of goods : Suppose a consumer has a daily income of $100 and purchases just two goods A and B.  The price of good A is $5 and the price of good B is $4.
Mean number of letters : Find out the mean number of letters that will arrive in two days.
Insurance policy-utility function : What is the highest price that you would be willing to pay for an insurance policy that fully insures you in the event that your house burns down?
Explaining relationship between two variable by scatter plot : Create a scatter plot for those data. Based on scatter plot, how would you explain relationship between the two variable.
Suggesting the dss solution : Now you are asked to suggest a DSS solution in order to help the claim adjusters recognizes and red flag various types of fraud.
Describe labour cost : Describe Labour Cost and how many testers should they use to carry out the testing effort
What is the molecular formula of this compound : Solving this question helps the student to understand how to find molecular  formula using  moles and mass and What is the molecular formula of this compound?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd