Homework 5Preview the document

Table for question 1B (Chapter 6, Santerre)Preview the document

Clarifications and Hints

Click here to get examples of how I expect you to show your work when answering homework questions.Preview the document

For question 1B (Chapter 6), please use the table I provide above to show your work. Make sure to verbally explain what happens to the expected loss and standard deviation. For this question you may want to review the example on Table 6-1 (page 159) that I discuss at the beginning of the first video lecture I created for Module 6.

For question 3, you may want to review the the “Risk Averse Assumption” example I discuss in the first video lecture I created for Module 6. To answer question 3C, you have to calculate and compare the expected utility without insurance with the actual level of utility if he were to purchase health insurance given a premium of $1,500. To answer question 3E, you have to assume that the premium is $1,500 and recall that the loading fee is the difference between the premium received from the policy holder and the expected dollar amount ACME would he to send to the policy holder.

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