Scenario 17.4 Consider the Following Information

question 80

Multiple Choice

Scenario 17.4
Consider the following information:
StowUrStuff Storage is located slightly below sea level in a coastal town. It could build and maintain a flood control system around its property at an annual cost of $1000, and if it did so, the probability of a flood's doing $1,000,000 in damage during the year would be .005. With no flood control system, the probability of such a flood would be .01.
-Refer to Scenario 17.4. If the flood control system were in place, the firm could insure against a flood for an annual premium of:

• A) $5,000.
• B) $10,000.
• C) $100,000.
• D) $200,000.
• E) $1,000,000.

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Definitions:

Created

Brought into existence; the act or process of bringing something into being that did not exist before.

Rightful Owner

A person or entity that legally possesses property or title.

Constructive Trust

A legal remedy imposed by a court to prevent unjust enrichment by transferring property from the person who unjustly benefits to the rightful owner.

Settlor

The individual who creates a trust by legally transferring assets into it, setting the terms for its management and distribution.