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Imagine that 50-year-old men can be divided into two groups: those who have a family history of cancer and those who do not. For the purposes of this example, say that 20% of a group of 1,000 men have a family history of cancer, and these men have one chance in 50 of dying in the next year, while the other 80% of men have one chance in 200 of dying in the next year. The insurance company is selling a policy that will pay $100,000 to the estate of anyone who dies in the next year.
a. If the insurance company were selling life insurance separately to each group, what would be the actuarially fair premium for each group?
b. If an insurance company were offering life insurance to the entire group, but could not find out about family cancer histories, what would be the actuarially fair premium for the group as a whole? c. What will happen to the insurance company if it tries to charge the actuarially fair premium to the group as a whole rather than to each group separately?
1. a sample of irish households shows the following size distributionhousehold sizefrequency133241326424514657181a
What reasons (more than one) did investors in large investment banks have for investing in very risky loans? Use the following 3 words in your answer: interest rate, return, price
Which of the following is an example of an oligopolistic market structure?
Your current wealth level is M=49, and you are forced to make the following wager: if a fair coin comes up heads, you get 15; you lose 24 if it comes up tails. Your utility function is U(X)=sqrt(X). What is the most you would pay to get out of the ..
Estimated market shares for the cellular phone manufacturing market are given in the table below. If Samsung were to merge with Sanyo, the four-firm concentration ratio would be Firm Market Share Nokia 36% Fujitsu 3% Kyocera 3%
Research a product from one of the 4 options listed and write a detailed report on the product. This report should explain how the component is built and designed; why the product is important in the building process
Is demand elastic in the $10 - $15 price range Ed = 0.8 in the $6 - $10 price range. In this range of demand, by what percentage would quantity demanded change if price changes by 10 percent Price falls from $6 to $3. Does total revenue (TR) incr..
Suppose it is known that 45% of the population are Coalition voters, 45% are ALP voters, and 10% vote for Greens.
A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is S = 50 + 5P. The domestic demand curve is D = 400 - 10P. In addition, each unit of production yields a marginal social benefit of 10. a. C..
What lessons can be derived from Boserup's analysis?
Assume that a new car hits that market that has been shown to have a lower risk of fatal accident. In particular, 1/5000 cars is expected to result in fatal accident. The risk of fatal accident for the same car without the new safety features is 1..
Real GDP Consumption Planned Investment Government Purchases Net Exports $1,000 $1,000 $100 $150 -$50 2,000 1,900 100 150 -50 3,000 2,800 100 150 -50 4,000 3,700 100 150 -501) Using the table above, answer the following question. The numbers in the t..
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