An Operator of an Oil Well Has a 0

Multiple Choice

An operator of an oil well has a 0.5% chance of experiencing a catastrophic failure.This failure will cost the operator $500 million.If the risk-free rate is 2%,the expected return on the market is 8%,and the beta of the risk is 0,what is the actuarially fair insurance premium?

A) $2,450,980
B) $2,500,000
C) $2,550,000
D) $2,314,815
E) $2,715,225