An individual owns a $100,000 home. She determines that her chances of suffering a fire in any given year to be 1/1000 (0.001). She correctly calculates her expected loss in any year to be $100. Explain why this really isn't a good way to measure her potential for loss.
What will be an ideal response?
While all of her calculations may be accurate this individual may be better off considering value at risk, which is the worst outcome. The value at risk from a fire for her in this case is $100,000 which, if suffered, could prove devastating.
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Growers expect that the price of a bushel of wheat will increase in one month. This belief results in
A) an increase in current supply of wheat. B) a decrease in current supply of wheat. C) a decrease in future supply of wheat. D) no change in current or future supply of wheat.
The 2010 Federal Personal Income six tax brackets range from 10 percent for individuals earning less than $8,025 to 35 percent for those earning over $357,700. The personal income tax system is
A) regressive. B) progressive. C) proportional. D) flat-rate.
Suppose when the price of a cookie is $2.50, the quantity demanded is 50, and when the price is $1, the quantity demanded is 200. Using the midpoint method, the price elasticity of demand is:
A. –1.40 B. –0.72 C. –140 D. –7.2
A study of what manufacturers thought their average total cost curves look like revealed that most
a. believe their ATC is downward sloping b. believe their ATC is horizontal c. believe their ATC is upward sloping d. believe their ATC is U-shaped e. do not know what their ATC looks like