corporate finance 41
Revise the last sheet so that there are 10 people in the insurance pool. Assume that each individual has an 80% chance of not having an accident, and 20% chance of having an accident. If accident happens, insurance company is expected to pay $25,000 to cover each accident. Calculate the expected loss and risk per participant. Write a short paragraph of how your numbers compare to the case of only 3 participants in the insurance pool. Make sure to make an argument about why you see the difference, if any, in the results.