A Firm Estimates That the Loss from a Weather-Related Closing

Multiple Choice

A firm estimates that the loss from a weather-related closing is $20 million and the probability of occurrence is 0.2% over the next year.If claims are paid at the end of the year,the annual risk-free rate is 5%,the market risk premium is 6%,and the beta of these losses is 0.7,compute the insurance premium.

A) $28,198
B) $36,630
C) $37,259
D) $39,491
E) $38,175