An Operator of an Oil Well Has a 0

question 83

Multiple Choice

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 -1.2,what is the actuarially fair insurance premium?

• A)$2,500,000
• B)$2,637,131
• C)$2,550,000
• D)$2,753,304
• E)$2,145,000

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Definitions:

Traditional Values

The long-established principles and moral standards that are passed down through generations, often seen as the foundation for social norms and behaviors.

Constant Television Households

Homes where the television is frequently or almost always on, regardless of whether or not someone is actively watching.

Ethnocentrism

The belief in the inherent superiority of one’s own ethnic group or culture, often accompanied by a disdain for other groups.

Media

A means of communication that reach or influence people widely, including print media, broadcast media, and digital media.