Multiple Choice
A risk premium is:
A) a payment to an insurer by a policy-holder who faces a potential loss.
B) equal to the purchase price of an insurance policy.
C) the necessary difference between the expected value of a lottery and the payoff of a sure thing to make the decision maker indifferent between the lottery and the sure thing.
D) the difference between the expected value and the variance of a lottery.
Correct Answer:
Verified
Correct Answer:
Verified
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