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:

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The inherent characteristics, including ways of thinking, feeling, and acting, that all human beings share, despite cultural or individual differences.

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Constitutional Convention

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