Use the Information for the Question(s)below

question 2

Multiple Choice

Use the information for the question(s) below.
Your firm faces an 8% chance of a potential loss of $50 million next year. If your firm implements new safety policies, it can reduce the chance of this loss to 3%, but the new safety policies have an upfront cost of $250,000. Suppose that the beta of the loss is 0 and the risk-free rate of interest is 5%.
-An operator of an oil well has a 0.5% chance of experiencing a catastrophic failure. This failure will cost the operator $500 million. If the risk-free rate is 2%, the expected return on the market is 8%, and the beta of the risk is 0, what is the actuarially fair insurance premium?

• A)$2,450,980
• B)$2,500,000
• C)$2,550,000
• D)$2,314,815

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Sexual Harassment

Unsolicited sexual propositions, solicitations for sexual benefits, and any form of sexual natured verbal or physical harassment.

Paid Vacation

Employer-provided benefit that offers employees paid time off from work, which can be used for personal time, holidays, or travel.

Sufficient Wages

Compensation or income levels that are adequate to support a worker's basic needs and living expenses.

United States Code

The codification of the general and permanent laws of the United States, organized by subject matter.