A firm has the following probability distribution for annual losses due to vandalism: Loss Amount $0...

 

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A firm has the following probability distribution for annual losses due to vandalism: Loss Amount $0 $5,000 Probability 0.65 0.30 $10,000 The firm is considering three options: 0.05 1. Partial Insurance > Face amount $5,000; Premium - $1,000 = 1 2. Deductible Insurance > Face amount = $10,000; Deductible $500; Premium = $2,500 3. Avoidance Derive the loss matrix for the firm. Simply copy and paste the below loss matrix template (if you want) into your answer box > and then fill out the loss matrix accordingly. Complete the loss matrix to then Calculate the Expected Cost of each option? (3 points) A firm has the following probability distribution for annual losses due to vandalism: Loss Amount $0 $5,000 Probability 0.65 0.30 $10,000 The firm is considering three options: 0.05 1. Partial Insurance > Face amount $5,000; Premium - $1,000 = 1 2. Deductible Insurance > Face amount = $10,000; Deductible $500; Premium = $2,500 3. Avoidance Derive the loss matrix for the firm. Simply copy and paste the below loss matrix template (if you want) into your answer box > and then fill out the loss matrix accordingly. Complete the loss matrix to then Calculate the Expected Cost of each option? (3 points)

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A firm has the following probability distribution for an... View the full answer