An insurance company is risk neutral and a potential customer has a constant coefficient of...
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Finance
An insurance company is risk neutral and a potential customer has a constant coefficient of risk aversion equal to .1 Given that there is a .01 chance that the customer's $10,000 car will be destroyed by an accident in the coming year, how much should the customer be willing to pay for insurance? What would be the insurance companys minimum selling price? Would they be able to agree on a deal?
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