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If There Are 1,000 People, Each of Whom Owns a $100,000

question 89

Essay

If there are 1,000 people, each of whom owns a $100,000 house, and they each stand a
1/1,000 chance each year of suffering a fire that will totally destroy their house, what is the minimum that they would have to pay annually for fire insurance?


Definitions:

Electronic Sound

Audio signals generated, transmitted, or recorded by electronic devices.

Trade Name

A term that is used to indicate part or all of a business's name and that is directly related to the business's reputation and goodwill. Trade names are protected under common law (and under trademark law if the business’s name is the same as its trademark).

Business's Name

The official, legally registered name under which a company operates and conducts its business.

Reputation

The public perception or opinion of an individual, company, or product based on past actions or achievements.

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