An insurance company knows that the average cost to build a home in a new California subdivision is $96,618 and that in any particular year there is a 1 in 3 chance of a wildfire destroying all the homes in the subdivision. Based on these data and assuming the insurance company wants a positive expected value when it sells policies, what is the minimum the company must charge for fire insurance policies in this subdivision?
An insurance company knows that the average cost to build a home in a new California subdivision is $96,618 and that in any particular year there is a 1 in 3 chance of a wildfire destroying all the homes in the subdivision. Based on these data and assuming the insurance company wants a positive expected value when it sells policies, what is the minimum the company must charge for fire insurance policies in this subdivision?
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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An insurance company knows that the average cost to build a home in a new California subdivision is $96,618 and that in any particular year there is a 1 in 3 chance of a wildfire destroying all the homes in the subdivision. Based on these data and assuming the insurance company wants a positive
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