Person A faces a 60% chance of having no loss and a 40% chance of having a loss of $25. Person B faces a 60% chance of having no loss and a 40% chance of having a loss of $50. Question 1: Suppose Person A purchases full insurance for an actuarially fair premium (AFP) and Person A is the ONLY person in the insurer's risk pool. a. What is the actuarially fair premium (AFP) of full insurance for Person A? b. What is the amount of risk the insurer faces?

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