Problem Set 1 Solution Addendum
Professor Jeremy Tobacman
BEPP 305/805 Spring 2014
Some confusion has arisen about parts of Question 2 from Problem Set 1. The posted solutions
are correct, so feel free to ignore the following if you understand them alread
BEPP 305805 Practice Exam
MODULE III EXAM (WITH ANSWERS)
Taken from Spring 2012, Module III
Professor Greg Nini
Short Answers (30 total points). Answer the following as succinctly as possible. The space provided is
more than enough to get full credit. Al
BEPP 305 / 805, Spring 2015
Problem Set 1
Due Monday 1/26/2015 by 11:59pm via Canvas
Instructions:
While you can work in a group, you must write up and submit your own
answers.
Answers must be submitted via Canvas.
You may scan or photograph and upload
BEPP 305/805, Spring 2014
Problem Set 1
Please submit your answers via Canvas no later than 5pm on Friday, 1/24.
Question 1. Consider a random variable X with sample space cfw_x1, x2 and
probability distribution p(x1)=p1 and p(x2)=p2.
a) Write down the fo
BEPP 305805 Practice Exam
MODULE III EXAM (WITH ANSWERS)
Taken from Fall 2012, Module III
Professor Greg Nini
Short Answers (32 total points). Answer the following as succinctly as possible. The space provided is
more than enough to get full credit.
1. (
BEPP 305 / 805 Risk Management
Solutions to Problem Set 1
Spring 2015
Question 1. Consider a random variable X with sample space cfw_x1, x2 and
probability distribution p(x1)=p1 and p(x2)=p2, where p1+p2=1.
a) Write down the formulas for E[X] and Var(X).
BEPP 305/805 Module 1 Exam
Spring 2014 Sample Solutions
Professor Jeremy Tobacman
BEPP 305/805 has three sections, which meet at 10:30am, 1:30pm,
and 3pm. The morning section exam diered slightly from the afters
noon sections exam. Solutions below pertain
PRACTICE MIDTERM QUESTIONS
(a) Please write down his pro.ts as a function of the price PD, _ =
_ (PD). What are his pro.ts in a slump? In a boom? What are
his expected pro.ts? (4 points)
(b) The developer is considering entering into a futures contract ba
INSR 305 / 805 Risk Management
Fall 2014
Professor Daniel Gottlieb
Solutions to Problem Set 1
Question 1. Consider a random variable X with sample space cfw_x1, x2 and
probability distributi
PRACTICE MIDTERM I SOLUTIONS
Fall 2013
Part I: True or False, and Justify. (35 minutes) Determine whether each of the
following statements is true or false, and state either true or false. Then provide
a justication. Answers without justication will not b
BEPP 305  MIDTERM I
Fall 2013
Rules:
Do not begin the exam until instructed to do so.
This is a closedbook, closednotes exam. Calculators are allowed as long as they
do not store formulas.
You have 80 minutes to complete the exam.
Please be courteous t
BEPP 305_Practice 1
4. Real Estate Development Risk. (44 points) A real estate developer has
$1,000,000 which he plans to invest in a new real estate development.
After he builds the development, he will be able to sell it for a price, PD.
This selling pr
BEPP 305 Practice 2
3. (22 Minutes)
ABC Inc. is a publiclyheld firm with limited liability that will exist for only 3 years. It
has a cash flow of $0 at the end of the first year; $500 at the end of the second year; and
$3000 at the end of the third year
Problem Set 3
BEPP 305/805 Spring 2014
I suggest you review the lecture notes and class slides on expected utility and the insurance
market before you work on this problem set. Submit your answers via Canvas no later than 5pm
on Friday, 2/7.
Question 1. J
Practice Questions on Moral Hazard and Adverse Selection
BEPP 305/805 Fall 2012
Question 1: An employer would like to hire workers for open positions in her company. Everyone
knows that half of the potential employees are skilled, and the other half is un
BEPP 305/805
Module II, Lecture 4
Daniel Gottlieb
Fall 2014
Previous classes
Adverse selection happens when one party
has private information at the time of
contracting
Offering the same contracts to parties with
private information brings an adversely
se
Intertemporal Consumption
Daniel Gottlieb
BEPP 305/805  Spring, 2014
These notes go over intertemporal consumption and precautionary savings (Lecture 7). We
will discuss two scenarios of optimal intertemporal consumption choices: when future income is
ce
Risk Aversion and Portfolio Choice
Daniel Gottlieb  dgott@wharton.upenn.edu
BEPP 305/805  Fall 2014
These notes complement the slides from Lecture 5. In class, I mentioned that an investor with
constant absolute risk aversion should allocate a xed dolla
1
UNIVERSITY OF PENNSYLVANIA
Professors Gottlieb and Mitchell
The Wharton School
Fall 2014 Syllabus
BEPP 305/805: Risk Management
The recent financial crisis and subsequent recession provide ample evidence that failure to properly
manage risk can result
BEPP 305/805: Risk Management
Module III: Lecture 19
Olivia
S. Mitchell
Wharton, University of Pennsylvania
Fall 2014
Read AONs 2013 Global Risk Management Survey
Intro notes:
About me: Pensions, Social Security, risk
management.
Served on bipartisan Pre
1
BEPP 305/805: Lecture 3
Daniel Gottlieb
2
Last Class
Law of Large Numbers
Sample Mean converges to Mean of the Distribution
Empirical Histogram converges to the Probability
Distribution
We can use past observations to estimate the
distribution
Risk
Problem Set 3
Professor Jeremy Tobacman
BEPP 305/805 Spring 2015
In completing this assignment, recall the course collaboration policy: You can work in teams,
but you must write and submit your own answers. The assignment is due via Canvas no later
than 1
BEPP 305/805
Lecture 5
Daniel Gottlieb
Last Class: Moral Hazard in Insurance
!
!
Offering insurance affects how consumers behave
! Exante moral hazard: not enough preventive effort
! Expost moral hazard: overutilization of care
Partial coverage is neede
Value at Risk (VaR)
BEPP 305/805

Fall, 2014
Daniel Gottlieb  dgott@wharton.upenn.edu
These notes are aimed to help you understand the concept of Value at Risk (VaR). We will discuss
its denition, how it is computed, how it is used, and some of its limi
Expected Utility and Insurance
Daniel Gottlieb
BEPP 305/805  Fall, 2014
These notes go over the expected utility model of insurance seen in Lecture 4. Recall that
Expected Utility Theory starts with the notion of a gamble (also called a lottery or a pros
1
BEPP 305/805: Lecture 5
Daniel Gottlieb
2
Last Class
Bernoullis solution for the St. Petersburg Paradox
Evaluate the utility of all outcomes u(Xi)
Take the expectation E[u(X)]
But what is utility?
Can it be measured? In what units?
Can it be compa
BEPP 305/805: Lecture 6
Daniel Gottlieb
2
Last class
vonNeumann and Morgenstern and Expected Utility
Under 3 reasonable assumptions, any decision
procedure is the same as maximizing expected utility
!
In practice, we need to specify a utility function
BEPP 305/805
Fall 2016
BEPP 305/805: Risk Management
Module II: Practice Problems
Professor Neil Doherty
Questions
1. Professor Nini likes his job a lot. When he works, he earns money but
spends most of his time sitting at his desk and not spending very m
BEPP 305/805
Fall 2016
BEPP 305/805: Risk Management
Module I: Problem Set 2
Professor Neil Doherty
Question 1. Suppose that Zeke has an initial wealth of W = 1,000 and faces
a potential loss of L = 500, which happens with probability p = 0.5. Zeke
has th
BEPP 305/805
Fall 2016
BEPP 305/805: Risk Management
Module I: Problem Set 1
Professor Neil Doherty
Question 1. Consider a random variable X with sample space cfw_x1 , x2 and
probability distribution p(x1 ) = p1 and p(x2 ) = p2 , where p1 + p2 = 1
a) Wri
BEPP 305805 Module III:
Lec 25 RM Strategies
Olivia
S. Mitchell
Wharton School, University of Pennsylvania
Fall 2016
Reputation insurance? https:/www.youtube.com/watch?v=y2YZ29752CU
Watch to 3:44
Goals of Lecture
Provide an introduction to a variety of
Allianz Global Corporate & Specialty
A Guide to
Cyber Risk
Managing the Impact of
Increasing Interconnectivity
Scope of the Report
Scope of the Report
Cyber risk is now a major threat to businesses. Companies increasingly
face new exposures, including fir