Author Question: A home insurance company anticipates the following pattern of claims, based on historical data. What ... (Read 55 times)

fbq8i · **on:** Apr 25, 2021

Question 1

Which of the following would be the most useful to an investor who is evaluating securities to add to her portfolio?
◦ The previous opportunity cost of holding the asset
◦ The simple interest return
◦ The historical return
◦ The expected return
◦ The Lynch risk-adjusted historical return

Question 2

A home insurance company anticipates the following pattern of claims, based on historical data. What is the expected claim on the next policy sold by the company?

Type of Claim	Size of Claim	Number of Claims out of 10,000 Policy Holders	Probability
1	$200,000	1	0.0001
2	$50,000	10	0.001
3	$2,000	200	0.02
4	$0	9,789	0.9789

◦ $100
◦ $110
◦ $120
◦ $130
◦ $140

bimper21 · **Reply #1 on:** Apr 25, 2021

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