Teddy is considering buying flood insurance. The cost of flood insurance is $400 per year. Teddy predicts that there is a 20% chance that his house will flood and estimates that a flood will cause $1,000 in damages. If he gets insurance and there's no flood damage, he will lose his $400. However, if he gets insurance and there is flood damage, the insurance company will pay $1,000 for the damages. Since Teddy only paid $400 for the insurance, he will essentially save himself $600. What is the expected value of savings/losses for Teddy buying insurance?
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Teddy is considering buying flood insurance. The cost of flood insurance is $400 per year. Teddy predicts that there is a 20% chance that ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
1. A person that wishes to incorporate a business needs to a. Find stockholders b. Pay government dividends c. File for permission from the government d. Do all of the above
Answers (1)
One implication of the phenomenon described by economist richard easterlin as the "hedonic treadmill" is that: question 4 options: people who consume more goods and services are happier than those who consume less
Answers (2)
The major difference between the westphalian and neo-westphalian systems is
Answers (1)
SDJ, Inc., has net working capital of $2,170, current liabilities of $4,590, and inventory of $3,860. a. What is the current ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b.
Answers (1)
On June 1, 2018, Dirty Harry Co. borrowed cash by issuing a 6-month noninterest-bearing note with a maturity value of $500,000 and a discount rate of 6%.
Answers (1)
New Questions in Business
A company that produces gift cards for various retail stores implemented a marketing campaign that for a limited time offered a 10% discount on gift cards if you purchased three or more at the same time.
Answers (1)
A currency trader observes the following quotes in the spot market: 1 U. S. dollar = 122 Japanese yen 1 British pound = 2.25 Swiss francs 1 British pound = 1.63 U. S.
Answers (1)
Mary, Susan, and Sarah are running a beach boutique on the board walk of Ocean City. Their favorite product is a red lifeguard hoody. Mary believes it will sell 341 times next season.
Answers (1)
Stone Foods produces the majority of its cheese products in its U. S. based dairy division at a total outlay cost of $6.00 per unit.
Answers (1)
The last dividend paid by Coppard Inc. was $1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever.
Answers (1)