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1)Which of the following insurance business is/are easy to apply the insurance principle? Select one or more: A
1)Which of the following insurance business is/are easy to apply the insurance principle? Select one or more: A. Life insurance B. Earthquake insurance C. Car insurance D. Weather insurance U Health insurance
2)The following are estimates of the single index model for two stocks: 5% Stock Expected Return Beta Nonsystematic SD 1 15.9% 2.5 15% 2. 7.3% 0.5 The market index has an expected return of 9% and a standard deviation (SD) of 10% and the risk-free rate is 5%. Calculate the weights in stocks 1 and 2 in the optimal risky portfolio consisting of Stocks 1 and 2 and market index.
Expert Solution
1)
The correct answer is option A. Life insurance
Reason:
The principles of insurance can be easily and better applied in case of Life insurance. It involves less complexities when compared to other types of insurance. Since, life insurance is taken on the life of a person, you will have supporting documents available to confirm the age and also death. Where as in other types of insurance you need to work hard to establish the genuinity of the event/loss happened and also calculation of the actual loss.
2)Please use this google drive link to download the answer file.
https://drive.google.com/file/d/1P8iFkeeBDsJYzgjUU39IExw5QktOSpXQ/view?usp=sharing
Note: If you have any trouble in viewing/downloading the answer from the given link, please use this below guide to understand the whole process.
https://helpinhomework.org/blog/how-to-obtain-answer-through-google-drive-link
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