Question: please solve as soon as possible Q3. A financial contract pays a reward to the participants when losses are below a certain threshold, this is

please solve as soon as possible Q3. A financial contract pays

a reward to the participants when losses are below a certain threshold,

please solve as soon as possible

Q3. A financial contract pays a reward to the participants when losses are below a certain threshold, this is a particular type of problem which Weishaus calls a Bonus problem. The bonus, dividend, or refund amount is expressed as a maximum between 0 and the refunded amount. For example, a 15% refund is paid on the difference between the $100 premium and the loss L where losses are distributed exponentially with parameter 0=80. Find the expected reward payment. [25 pts)

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