A corn farmer has a revenue insurance policy that guarantees a revenue level of $925 per acre. The table below provides the risk profile for the farmer. Complete table below by calculating the indemnity payment for each weather condition scenario, and then calculate the fair premium for the policy. Yield Price Revenue Weather Revenue Insurance Probability Conditions (bushels/acre Indemnity ($/bushel) ($/acre) Drought (very 0.05 95 $8.00 $760 dry) 0.10 Dry 135 $6.50 $878 Flooding (very 0.05 150 $6.00 $900 wet) 0.10 Wet 190 $5.00 $950 0.5 Normal 210 $4.80 $1,008 Above 0.15 240 $4.00 $960 Average 0.05 Excellent 280 $3.50 $980 Fair Premium =
A corn farmer has a revenue insurance policy that guarantees a revenue level of $925 per acre. The table below provides the risk profile for the farmer. Complete table below by calculating the indemnity payment for each weather condition scenario, and then calculate the fair premium for the policy. Yield Price Revenue Weather Revenue Insurance Probability Conditions (bushels/acre Indemnity ($/bushel) ($/acre) Drought (very 0.05 95 $8.00 $760 dry) 0.10 Dry 135 $6.50 $878 Flooding (very 0.05 150 $6.00 $900 wet) 0.10 Wet 190 $5.00 $950 0.5 Normal 210 $4.80 $1,008 Above 0.15 240 $4.00 $960 Average 0.05 Excellent 280 $3.50 $980 Fair Premium =
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter5: Probability: An Introduction To Modeling Uncertainty
Section: Chapter Questions
Problem 17P: The probability distribution for damage claims paid by the Newton Automobile Insurance Company on...
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