Essay
Jaleh has just landed a great job and plans to buy a fancy car worth $100,000.Jaleh is
risk-averse, but she likes to drive fast, so the probability that she wrecks and totals the car (a total loss of $100,000) is 0.1.The probability that she has no accidents is 0.9.If an insurance company were to offer Jaleh a fair insurance policy that completely replaced her car, how much would she pay? What is the most she would pay for an insurance policy that would completely replace her car if she totaled it?
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The fair insurance policy premium is equ...View Answer
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Correct Answer:
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