A house owner plans to buy a fire insurance for his house worth $100000, suppose there is 10% chance of house catching fire which will cause him damages worth $40000. Find the amount which the person is willing to pay over and above acturially fair price of the fire insurance if his utility function is U= W0.5 (where W = wealth )? 4460 500 O 4000 460

A house owner plans to buy a fire insurance for his house worth $100000, suppose there is 10% chance of house catching fire which will cause him damages worth $40000. Find the amount which the person is willing to pay over and above acturially fair price of the fire insurance if his utility function is U= W0.5 (where W = wealth )? 4460 500 O 4000 460

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter10: Managing Property And Liability Risk

Section: Chapter Questions

Problem 2DTM

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