A company has sold an insurance policy. A loss event occurs with aprobability of 0.2 . If the loss event has occurred, then the amount ofdamage is a r.v. & uniform on [0, 10].Suppose that the policy provides the complete coverage of the loss (so,now there is no restriction on maximal payment).Consider a portfolio of 10,000 independent policies of the type above.Suppose the company proceeds from a security level of 3 = 0.9.Select from below the number closest to the minimal premiumacceptable for the company. (The quantile q0.9,s≈ 1.282 ).A.approximately 2.077B.approximately 1.361C.approximately 0.038D.approximately 2.026E.approximately 1.031

Probability of loss = 0.2Loss is distributed uniformed on [0,10]security level = 0.9quantile = 1.282

Answered: A company has sold an insurance policy.…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Consider an agent whose behavior is best described by prospect theory with loss aversion. Calculate the value of the following prospect for the agent with value function v(*;) = {1.57. if and initial wealth w = 1000. r; < 0, Payoff 248 lo |-248 Probability 20% 70% 10%
2.) The following are the weekly losses of worker-hours due to accidents in 10 industrial plants before and after a certain safety program was put into operation: 45 & 36 73 & 60 46 & 44 124 & 119 33 & 35 57 &51 83 & 77 34 & 29 26 & 24 17 & 11. Use 0.05 level of sig to test whether the safety program is effective.
2. In a market in which the Arbitrage Pricing Theory (APT) model holds, the expected return is given by E[R] = 20 +ẞi,₁₁ + Bizd₂+, ..., +ßi,nan a) Assume that risk-free rate in this economy is 0.02. Consider a two-factor model, n = 2 and two well diversified portfolios P₁ and P2 with the following features: Expected returns: E(R₁) Sensitivity to factor 1: ẞi,1 P₁ 0.18 P₂ 0.05 0.2 0.1 0.7 0.3 Sensitivity to factor 2: Biz Find the risk premiums for each factor.
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Need assistance with question 2 iv, v. I already got help with i, ii, iii
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