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# hw1 - UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN Actuarial...

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1 UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN Actuarial Science Program DEPARTMENT OF MATHEMATICS Math 476 / 567 Prof. Rick Gorvett Actuarial Risk Theory Fall, 2010 Homework Assignment # 1 (max. points = 10) Due at the beginning of class on Thursday, September 2, 2010 You are encouraged to work on these problems in groups of no more than 3 or 4. However, each student must hand in her/his own answer sheet. Please show your work – enough to show that you understand how to do the problem – and circle your final answer. Full credit can only be given if the answer and approach are appropriate. Please provide answers to two decimal places. Note: When calculating a percentage, please provide answers either as a proportion to four decimal places (e.g., 0.xxxx), or as a percentage to two decimal places (e.g., xx.xx%). (1) I enter into a forward agreement with you, to sell my car to you for \$4,000 on December 31, 2010. On that date, my car is worth \$3,725. What is your net profit or loss on December 31, 2010 from this agreement?

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