Business, 21.04.2020 01:21 chonawilson4
Assume that three business owners each own an identical storage building valued at 120,000$. Assume that there is a 1% chance in any year each building will be destroyed by a peril (fire), and that a loss to any of the buildings is an independent event. Assuming that:
• Fire events are independent of each other
• Each building faces same types of risks and environmental conditions. Given that, solve the following questions:
1. Use the compound probability of independent events law to find the sample space of the probability of each possible event
2. Find the annual expected loss for each of the insureds.
3. Find the risk of incurrence of losses (Std dev).
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