ARE 115A Problem Set 4 SQ24

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7. Individual Problems 19-6 You need to hire some new employees to staff your startup venture. You know that potential employees are distributed throughout the population as follows, but you can't distinguish among them: Employee Value Probability $30,000 0.1 $49,000 0.1 $68,000 0.1 $87,000 0.1 $106,000 0.1 $125,000 0.1 $144,000 0.1 $163,000 0.1 $182,000 0.1 $201,000 0.1 The expected value of hiring one employee is $ $68,000 Suppose you set the salary of the position equal to the expected value of an employee. Assume that em employee value. not work for a salary below their $49,000 $30,000 The expected value of an employee who would apply for the position, at this salary, is $ Given this adverse selection, your most reasonable salary offer (that ensures you do not lose money) is $87,000

(80) purchases a whole life insurance policy of 100,000 payable at the end of the year of death. You are given: I. The policy is priced with a select period of one year. II The select mortality rate equals 80% of the mortality rate from the Standard Ultimate Life Table. III Ultimate mortality follows the Standard Ultimate Life Table. i=0.05 Calculate the actuarial present value of the death benefits for this insurance. A.58,950 B.59,050 C.59,150 D.59,250 E.59,350

Of the methods for covering risk, which is essentially a dollar for dollar shift of consumption between periods? A. Savings B. Private Market Insurance C. Social Insurance D. Charity

A9 Describe an example of adverse selection that we may run into in the real world. How does adverse selection impact the policy holders for this specific type of insurance for: High risk participants? Low risk participants? What is one government regulation that has been enacted in the last 20 years that helps either high risk or low risk policy holders in the United States

(1) How would a private insurance carrier respond to a client that always took extreme risks and frequently submitted large claims?

Continue from Question 16: You make $20,000 per year, and there's a $100 insurance expense to mitigate a 1% risk of a $10,000 accident. Utility without insurance and no accident = 2000 Utility without insurance with accident = 1500 What is the expected utility "without" insurance? Utility "2000" "1999" "1500" 1999 2000 1995 1500 $10,000 $19,900 $20,000

___ occurs when insurance companies structure plans that provide an incentive for healthier consumers to enroll while discouraging enrollment of higher-risk individuals a. Guaranteed renewability b. Cherry-picking c. Moral Hazard d. Asymmetric Information e. Adverse Selection

10.1  explain for me. the question is just discuss

Risk they say it’s in every decision we make as humans. Kindly discuss a positive or negative RISK you have taken before or seen happening and its impact on you or the people that took such Risks

Question: What are the equations for measuring return and risk?

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9. Comparing policies Shopping for Life Insurance Suppose Kim has determined that a $100,000 universal life insurance policy would best suit her needs. Tina Trustworthy, a local life insurance agent, quoted her a monthly rate of $300. She remembers learning from her personal finance course that premiums for similar policies, so she plans to Before doing anything else, she decides to consult her Uncle Jim, an attorney, about the features of his life insurance policy. He tells Kim that he has a 10-year $200,000 term life policy. Tina Trustworthy is the second life insurance agent Kim consulted. The first agent she saw was David Dishonestman. Kim began to suspect that rather than trying to serve her best interests, David Dishonestman was primarily interested in earning as high a commission as possible. Which of the following behaviors would have raised Kim's suspicions? Check all that apply. O David Dishonestman described a policy with a high rate of interest, but it had to be purchased…

EXERCISE 3 Directions: Identify what type of hazard are the given examples below.   Heavy, frequent or awkward lifting Slipping Unguarded moving machines Human or animal blood or body fluids Pesticides and herbicides   Your answers here: 1. 2. 3. 4. 5.

2 Scenario Your client, InsureCorp, is an insurance company considering launching an 'income insur- ance' product in the nation of Motherland. Income insurance is a product that fully insures a household against changes in income caused by a major injury or illness. At present, no businesses are selling income insurance products in Motherland. Initial market research suggests that there are 15,000 households in Motherland interested in purchasing income insurance. Your client expects that the fixed cost of launching the income insurance product will be $25,000,000 per year, and that each policy issued to a customer will cost the company an additional $2,000 in sales commissions. 2.1 Your task Your client wants you to analyse the potential market for income insurance and report on the following: What is the maximum price the company can charge a household for an income insurance policy? What is the expected profit (or loss) for the company if it becomes a monopoly provider of income…

Write note on the following to develop ERM for a company: 1. Risk identification 2. Risk Assessment 3. Risk Analysis 4. Implementation 5. Monitoring 6. Evaluation

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Need typed answer.Please give answer within 45 minutes

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