Scott Lloyds Inc. has the following two uncorrelated losses distributions: Liability Loss = $100 million with probability 0.50 $ 10 million with probability 0.50 Property Loss - $60 million with probability 0.10 $30 million with probability 0.90 Scott Llyods has the ability to retain losses up to $80 million. It purchases two coverage with a $40
Scott Lloyds Inc. has the following two uncorrelated losses distributions: Liability Loss = $100 million with probability 0.50 $ 10 million with probability 0.50 Property Loss - $60 million with probability 0.10 $30 million with probability 0.90 Scott Llyods has the ability to retain losses up to $80 million. It purchases two coverage with a $40
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Scott Lloyds Inc. has the following two uncorrelated losses distributions:
Liability Loss = $100 million with probability 0.50
$ 10 million with probability 0.50
Property Loss - $60 million with probability 0.10
$30 million with probability 0.90
Scott Llyods has the ability to retain losses up to $80 million. It purchases two coverage with a $40
million deductible for the coverage of liability losses and a $40 million deductible for the coverage of property losses. Calculate the average unnecessary coverage.
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