Why would a person ever buy insurance

Assignment Help Managerial Economics

Reference no: EM13922064

Insurance companies have to generate enough revenue to cover their costs and make a normal profit-otherwise, they will go out of business. This implies that the premiums charged for insurance policies must be greater than the expected payouts to the policyholders. Why would a person ever buy insurance, knowing that the price is greater than the expected payout?

Reference no: EM13922064

Questions Cloud

Identify the main point and key players : Read the case study to identify the main point and key players. You will summarize the main points and identify themes as if you were telling someone this case for the first time. When writing this part of the paper, it is helpful to think about t..

What was dividend yield and the capital gains yield : Suppose a stock had an initial price of $64 per share, paid a dividend of $1.40 per share during the year, and had an ending share price of $76. What was the dividend yield and the capital gains yield?

The futures price for gold for three month contract on gold : The spot price for gold is $1,300 per ounce. The dividend yield on the S&P 500 is 5.4%. The risk-free interest rate is 7.5%. The futures price for gold for a 3-month contract on gold should be __________.

What is the best way to ensure the safety of children toys : What is the best way to ensure the safety of children's toys? In responding, please consider how the following groups would answer this question: government regulators (in the U.S. and China); consumer advocates, the toy industry, children's produ..

Why would a person ever buy insurance : Insurance companies have to generate enough revenue to cover their costs and make a normal profit-otherwise. Why would a person ever buy insurance, knowing that the price is greater than the expected payout?

Define the purpose of a management information system : Define the purpose of a Management Information System (MIS). Describe the organizational problem either caused by an inefficient MIS or requiring a MIS solution. Describe the impact of the organizational inefficiency. Provide reasons why the organiza..

How much is coefficient of variation for the new portfolio : An investor holds a porfolio of stocks and is consider in investing in the DBB Company. The firm's prospects look neutral and you estimate the following probability distribution of possible returns. How much is the coefficient of variation for the ne..

Write a memo discussing the advantages : Write a memo discussing the advantages to a business of arranging a line of credit.

Research a computer organization : You are to research a computer organization/computer architecture topic and present your findings in a research paper. You should read various reference materials to gather information, which then should be presented in a logically organized and c..

User Account

All Pages