Essay On Year 1Year 2Probrevenue100100 Cost

Risk Management Dung NguyenUCID: M12382181HOMEWORK 2Question 1:i. StateCash FlowProbabilityCF*ProbDeviationSqr. DevSqr. Dev * ProbNo Loss$3,000,0000.96$2,880,000$73,000$5,329,000,000$5,115,840,000State 1$1,500,0000.026$39,000-$1,427,000$2,036,329,000,000$52,944,554,000State 2$800,0000.01$8,000-$2,127,000$4,524,129,000,000$45,241,290,000State 3$00.004$0-$2,927,000$8,567,329,000,000$34,269,316,000  Expected value$2,927,000 Variance$137,571,000,000     SD$370,905.65ii. StateCash FlowProbabilityNo Loss3000000 – P0.96State 13000000 – P0.026State 23000000 – P0.01State 33000000 – P0.004iii. StateInsurers costProbabilityNo Loss$00.96State 1$1,500,0000.026State 2$2,200,0000.01State 3$3,000,0000.004iv. StateCash FlowLoss distributionProbabilityLoss*ProbNo Loss$3,000,00000.960State 1$1,500,000$1,500,0000.02639,000State 2$800,000$2,200,0000.0122,000State 3$0$3,000,0000.00412,000   E(Loss)$73,000   Price$100,000    Loading$27,000 v. StateCash FlowProbabilityNo Loss$2,900,0000.96State 1$2,900,0000.026State 2$2,900,0000.01State 3$2,900,0000.004Expected CF= $2,900,000,.