A Firm Wishes to Buy Fire Insurance at Its Plant

question 59

Multiple Choice

A firm wishes to buy fire insurance at its plant.The loss in case of fire is estimated to be $30 million and the probability of occurrence is 0.5% over the next year.If claims are paid at the end of the year and the annual risk-free rate is 10%,compute the insurance premium.

• A)$150,000
• B)$136,364
• C)$145,368
• D)$155,691
• E)$141,672

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Definitions:

Organizational Culture

A set of shared values, beliefs, and practices that characterizes an organization and guides its members' behaviors.

Cultural Values

The core principles and ideals upon which an entire community exists and functions, shaping behavior and setting standards for what is important.

Subcultures

Groups within a larger culture that have their own distinct values, behaviors, and traditions.

Dominant Values

The core principles and standards that are most important and widely upheld within a society, organization, or group.