Multiple Choice
A fairly-priced insurance policy is one in which:
A) the insurance premium is equal to the expected value of the promised insurance payment.
B) the insurance premium is equal to the expected value of the promised insurance payment plus a small profit for the insurance company.
C) the insurance premium is equal to the variance of the expected value of the promised insurance payment.
D) the insurance premium is equal to the variance of the expected value of the promised insurance payment plus a small profit for the insurance company.
Correct Answer:
Verified
Correct Answer:
Verified
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