8. A typical London cyclist might expect to earn £40k a year. This is reduced to £20k for one year following a serious i
Posted: Thu May 19, 2022 7:40 am
- 8 A Typical London Cyclist Might Expect To Earn 40k A Year This Is Reduced To 20k For One Year Following A Serious I 1 (72.42 KiB) Viewed 53 times
8. A typical London cyclist might expect to earn £40k a year. This is reduced to £20k for one year following a serious injury. The annual probability of a serious injury is 35%. (a) What is the expected annual income of a cyclist in London? [5 Marks] (b) A group of risk-adverse London cyclists agree to form a charity providing insurance. Those paying a fixed annual premium will receive £20,000 in the event of an accident. What is the "fair" (zero-profit) premium for this insurance policy? Show your work. [5 Marks] (c) Research has found that wearing a yellow head-protector can reduce the annual risk of injury to zero. Show in a large clearly labelled graph the maximum price that a risk-adverse cyclist would pay for a head-protector. Note: the answer given does not need to be precise but must be consistent with your graph. [5 Marks)