(Scenario: Flood Area)Use Scenario: Flood Area.A flood may occur,causing you to lose your entire home.In this case,your expected loss resulting from the flood would be: Scenario: Flood Area
Suppose that you own a home that is estimated to be worth $250,000.You live in a flood plain;as a result,the probability that you will lose your home to a flood is 30%.
A)$250,000.
B)$75,000.
C)$15,000.
D)$100,000.

Question

Quizplus · Accepted Answer

The expected loss resulting from the flood can be calculated by multiplying the value of the asset with the probability of losing it. In this case, the expected loss would be $250,000 x 0.30 = $75,000. Therefore, the best choice is B) $75,000.