Question: Given Fair insurance E(I) = $4,000 IS ' = $3,000 Is this insurance full or partial? Explain how you arrived at your answer 2.

Given

 

Fair insurance

E(I) = $4,000

IS ' = $3,000

Is this insurance full or partial?

Explain how you arrived at your answer

2. A person is asked to choose between 2 games:

Game 1:

Getting $200 with probability of 60%

Game 2:

Getting $300 with the probability of 40%

A risk-averse person will choose A risk-neutral person will choose?

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