Calculation of Various Metrics of Wealth Management by Homework Help Classof1

Calculation of Various Metrics of Wealth Management

byHomework Help Classof1

Kobo ebook | July 11, 2013

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Let’s say you have a total wealth (W) of $100,000, which includes a car worth $20,000. The probability of losing your car (over one year) is 25%. Your utility function is U(W) = ln(W).
(a) What is your expected wealth for the next year?
(b) What is your expected utility for the next year?
(c) What is the actuarially fair premium (AFP)?
(d) What is your expected utility if you pay the AFP for full coverage (b = $20,000)?
(e) What is the maximum premium you are willing to pay?
(f) What is the amount of the difference between the maximum premium and AFP, and what is this called?

Title:Calculation of Various Metrics of Wealth ManagementFormat:Kobo ebookPublished:July 11, 2013Publisher:Classof1Language:English

The following ISBNs are associated with this title:

ISBN:9990006257960

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