Revision as of 18:33, 25 July 2024 by Admin (Created page with "According to the pure premium method, the indicated rate per exposure unit equals <math display = "block"> \overline{P_I} = \frac{\overline{L + E_L} + \overline{E_F}}{1 - V - Q_T} = \frac{1500}{0.9 - Q_T}. </math> Since the indicated rate per exposure unit equals $2,000, then the formula above implies that the target profit percentage must equal '''15%'''.")
Exercise
ABy Admin
Jul 25'24
Answer
According to the pure premium method, the indicated rate per exposure unit equals
[[math]]
\overline{P_I} = \frac{\overline{L + E_L} + \overline{E_F}}{1 - V - Q_T} = \frac{1500}{0.9 - Q_T}.
[[/math]]
Since the indicated rate per exposure unit equals $2,000, then the formula above implies that the target profit percentage must equal 15%.