Head & Shoulders shampoo insured spokesman Troy Polamalu’s (of the Pittsburgh Steelers) head of hair for $1 million with Lloyd’s of London. The insurance payout would be triggered if he lost at least 60% of his hair during an on-field event. Assume the insurance company placed the odds of a payout at 1% in year 5. If Lloyd’s of London wanted a rate of return of 20% per year compounded semiannually, how much did Head and Shoulders have to pay in a lump sum amount for the insurance policy?
Head & Shoulders shampoo insured spokesman Troy Polamalu’s (of the Pittsburgh Steelers) head of hair for $1 million with Lloyd’s of London. The insurance payout would be triggered if he lost at least 60% of his hair during an on-field event. Assume the insurance company placed the odds of a payout at 1% in year 5. If Lloyd’s of London wanted a rate of return of 20% per year compounded semiannually, how much did Head and Shoulders have to pay in a lump sum amount for the insurance policy?
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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Head & Shoulders shampoo insured spokesman Troy Polamalu’s (of the Pittsburgh Steelers) head of hair for $1 million with Lloyd’s of London. The insurance payout would be triggered if he lost at least 60% of his hair during an on-field event. Assume the insurance company placed the odds of a payout at 1% in year 5. If Lloyd’s of London wanted a
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