(Scenario: Hurricane Coverage in Southern Florida) Use Scenario: Hurricane Coverage in Southern Florida. Your expected loss from a hurricane is:
Scenario: Hurricane Coverage in Southern Florida
Suppose that you own a home, estimated to be worth $250,000, that is located in the hurricane belt of southern Florida. The probability that you will lose your home to a hurricane is 30%.

Question

Quizplus · Accepted Answer

The expected loss from a hurricane can be calculated by multiplying the value of the asset ($250,000) by the probability of losing it (30%). Therefore, the expected loss is $75,000. Choice B is the best option.