Sitting in a fdic insured savings account

Assignment Help Business Management
Reference no: EM131288481

A family owns a house worth $250,000 and believes that the probability that a fire will house burn to the ground (complete loss) is 0.1% (or 0.001). Use this information to answer the following questions.

(a) If the family own no other assets than this house, what is the expected value of their asset?

(b) If the family had $25,000 sitting in a FDIC insured savings account, what would the expected value of their assets be?

(c) If this family was offered a homeowner's insurance policy that included coverage for loss due to fire, how much would they be willing to pay to cover their home completely? (Their reservation premium should leave them indifferent between insuring or not.)

Reference no: EM131288481

Questions Cloud

Identify all costs that are relevant-costs relative to trip : Wren is a consultant who is going from Philadelphia to Washington for a three-day seminar. She is undecided whether to drive to Washington or take the train. She has listed the following costs relative to her trip: should Wren take the train to Washi..
Discuss the effectiveness of monetary policy : Based on these conditions, discuss the effectiveness of monetary policy to promote expansion of the economy? (Please be very specific in your explanation and reasoning. That is, explain clearly and concisely what the policy choice involves in term..
Discuss why firms need global marketing controls : Discuss how the international organization of a firm may affect its planning process.- Discuss why firms need global marketing controls.
Explain the core principles or features of the deontological : Explain the core principles of that theory.Demonstrate how the principles of the theory support a certain position on that question.
Sitting in a fdic insured savings account : (a) If the family own no other assets than this house, what is the expected value of their asset? (b) If the family had $25,000 sitting in a FDIC insured savings account, what would the expected value of their assets be?
What is meant by performance indicators : What is meant by performance indicators? Why does a firm need them?- Performance reviews of subsidiary managers and personnel are required rarely, if at all, by headquarters. Why?
Calculate depreciation expense : A machince cost $500,000 is acquired on October 1, 2016. It is estimated salcage value is $50,000 and its expected life is 8 years. Calculate depreciation expense for 2016 and 2017 by each of the following methods,
Define marketing and outline steps in the marketing process : Define marketing and outline the steps in the marketing process.- What is marketing myopia, and how can it be avoided?
Backward bending labor supply curve : Is the market supply curve for your labor upward sloping? What is a backward bending labor supply curve?

Reviews

Write a Review

Business Management Questions & Answers

  Bit of drawing in association towards

1. Produce a couple of unmistakable difficulties get experienced to moving key security get prepared, and understand whether there are any parallels between your get-together. 2. Examine distinctive techniques you have utilized as a bit of drawing..

  Explain the firm''s financial manager has determined

Explain The firm's financial manager has determined that using a lockbox will reduce collection time by 3.9 days

  Brenda is a purchasing agent for commodities exchange corp

E-Products ship the order to Commodities. Is Commodities liable to E-Products under the contract? Is Brenda liable? In each case, if so, explain why? If not, explain why not?

  Optimistic decision maker

The following table shows the expected costs for 3 states of nature and 5 decision alternatives. Which decision alternative would the optimistic decision maker choose? Enter 1, 2, 3, 4 or 5.

  Characteristic of a certain thing

When a picture which is not neither moving ,talking nor doing anything but create ones attention is referred to as the presence since it represents some characteristic of a certain thing.

  Bottom of the firm to create change

Discuss how you might change your organization's culture as a grass-roots effort, or starting at the bottom of the firm to create change?

  Find the maximum possible profit

The grower has determined that because of uncertain demand, no more than 40 barrels of pruned olives should be produced. Use graphical LP to find the maximum possible profit

  According to the fcic the five major investment banks

According to the FCIC the five major investment banks were operating with leverage ratios in excess of 50/1 going into the financial crisis of 2007-2009. The bank will have a capital shortage of $5.5. True/ false

  Changes the permissions on all the existing files

Using "absolute" (numeric) notation, changes the permissions on all the existing files in the ~/NetworkingClass/scripts directory so that the "user" (owner) has all permissions, all users in the same group have read and execute permissions, and al..

  Describe the characteristics of multinational corporation

1. Define globalization and explain how it is creating a borderless world for today's managers. 2. Describe a global mindset and why it has become imperative for companies operating internationally. 3. Describe the characteristics of a multinational ..

  Comments into the code

Make sure that you put comments into the code for each class with your name, the class number and name, Week 8 project, date, and my name." Please have a nice, readable format for your work. Separate the different files and output neatly so that I..

  Methods of building high-performing teamsyou are making a

methods of building high-performing teamsyou are making a presentation to your supervisors who are part of a new

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!

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