1. Which represents full & unfair insurance? a.q > IH - IS and r = (p x q) b.q > IH - IS and r > (p x q) c.q = IH - IS and r < (p x q) d.q = IH - IS and r > (p x q) e.none of the above

2. Geting insurance turns IS into I'S. This represents a.income when healthy less r b.income when healthy less r plus q c.income when sick less r plus q d.income when sick less q plus r

3. Getting insurance turns IH into I'H. This represents a.Income when healthy minus (r + q) b.Income when healthy plus r c.Income when sick minus r d.Income when healthy minus r

4. on a graph showing Fair insurance, the premium paid can be measured on the horizontal axis a.from IS to IH b.from IS to E[I] c.from E[I] to IH d.from E[I] to IS

5. After surgery the patient could either : live for 1 more year (probability = 10%) live for 2 more years (probability = 30%) live for 3 more years (probability = 50%) the only other option is the patient during or right after surgery. What is the probability of the last alternative outcome (patient during or right after surgery) ? a. %5 b. 20% c. 10% d 1% d. not enough info

6. from quesitn above (6) what is the EXPECTED numbr of years left for this patient after surgery? a. 2.2 yrs b. 3.2 yrs c. 4.3 yrs d. 5.4 yrs. e. none

7. What term represents the insurance company's EXPECTED profit if a policyholder does not get sick? a. p x q b. p x (r-q) C. (1-p)r D. (1-p)(r-q)

8. Assuming q > r, which of the following is true? a. I(H) > I'(H) and I(S) < I'(S) b.   I(H) < I'(H) and I(S) < I'(S) c. I(H) > I'(H) and I(S) > I'(S) d. I(H) < I'(H) and I(S) > I'(S).