What premiums would it charge

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Reference no: EM133927089

Problem

Both Nadia and Samantha are applying to insure their car against theft. Nadia lives in a secure neighborhood, where the probability of theft is 10%. Samantha lives in a lesser secure neighborhood where the probability of theft is 25%. Both Nadia and Samantha own cars worth $10,000, and are willing to pay $100 over expected loss for insurance. Get the instant assignment help.

If the company can correctly anticipate the adverse selection, what premiums would it charge?

Reference no: EM133927089

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