An insurance portfolio has 201 contracts. The insurer uses the model of individual risks to set...
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An insurance portfolio has 201 contracts. The insurer uses the model of individual risks to set an annual variance premium. Assume that each contract has a mean of 6 and a standard deviation of 3, the stakeholders expect to collect a yearly dividend of 0.4%, and they are willing to accept a risk of bankruptcy of 0.01%. What is the balanced standard deviation premium that the insurance company should charge to the whole portfolio? An insurance portfolio has 201 contracts. The insurer uses the model of individual risks to set an annual variance premium. Assume that each contract has a mean of 6 and a standard deviation of 3, the stakeholders expect to collect a yearly dividend of 0.4%, and they are willing to accept a risk of bankruptcy of 0.01%. What is the balanced standard deviation premium that the insurance company should charge to the whole portfolio?
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ANSWER The standard deviation allows a funds performance swings to be captured into a single number ... View the full answer
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