Chap011 - Chapter 11 Choices Involving Risk Chapter 11...

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Chapter 11 - Choices Involving Risk Chapter 11: Choices Involving Risk Main Concepts and Learning Objectives This chapter focuses on risk. Two fundamental concepts, expected value and standard deviation, are explained in-detail. The chapter uses the Guaranteed Consumption line diagram to explain the impact of risk attitudes on individual decisions, and to explain the concepts of a risk premium and a certainty equivalent. These two concepts are then used to explain fundamental insurance concepts. Students who master the material presented in this chapter will be able to: Compute expected value and standard deviation Analyze risk using the Guaranteed Consumption line diagram. Analyze the implications of subjective probabilities and risk attitudes for individual decision-making Compute the risk premium, expected utility and the certainty equivalent Compute the value of full and partial insurance Describe strategies for risk management 11-1
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Chapter 11 - Choices Involving Risk Multiple Choice Quiz (10 questions) covering main points:
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