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Eco 202 ch 27 the basic tools of finance part 2
- 9. Insurance
Sharing risk
Does not eliminate risk
Spread around risk
- 10. Scenario
Cost: 1000
Risk: 1 in 100
Expected cost =
cost x risk =
1000 x .01
=10
- 11. Scenario
Expected cost =10
Total Cost = 1000
Get 100 people to give
10 each to fund the
account
10 x 100 = 1000
- 21. Valuation
What is it worth?
Analyze financial
statements and future
prospects