As a result of your findings, the retailer has decided to do an ERM analysis of all its retained risk. It has determined that a funded reserve is its preferred method of retention and it would like to make sure that it has enough to cover 95% of the values (97.5% of losses) of all situations with losses normally distributed. How much does the retailer need to have in its funded reserve if the expected losses are $2.5 million and standard deviation is $500,000?
As a result of your findings, the retailer has decided to do an ERM analysis of all its retained risk. It has determined that a funded reserve is its preferred method of retention and it would like to make sure that it has enough to cover 95% of the values (97.5% of losses) of all situations with losses normally distributed. How much does the retailer need to have in its funded reserve if the expected losses are $2.5 million and standard deviation is $500,000?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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As a result of your findings, the retailer has decided to do an ERM analysis of all its retained risk. It has determined that a funded reserve is its preferred method of retention and it would like to make sure that it has enough to cover 95% of the values (97.5% of losses) of all situations with losses normally distributed. How much does the retailer need to have in its funded reserve if the expected losses are $2.5 million and standard deviation is $500,000?
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