Suppose you own a car that is worth $25,000. State law requires you carry liability insurance, but given the value of your car, you also want the asset insured in case it's stolen or damaged. The purchase of such insurance on your car is an option. Identify the type of option and whether or not you're buying or selling the option. Draw the payoff diagram of your insurance policy.

 

Answer rating: 100% (QA)

In this scenario the insurance policy you are considering for your car can be viewed as a type of pu... View the full answer