Rm international wishes to sell $100 million of bonds whose net proceeds will be used in the acquisition of little brooks. the underwriter believes that the 100,000 bonds can be sold to the public at their $1,000 par value and estimates that its administrative costs will be $3.5 million. the selling costs will be 0.1% of the sale price. if the underwriter requires a profit equal to 0.75% of the sale price, how much will the spread per bond have to be, in dollars, to cover its costs and profits?

An insurance company estimates the probability of an earthquake in the next year to be 0.0015. the average damage done to a house by an earthquake it estimates to be $90,000. if the company offers earthquake insurance for $150, what is company`s expected value of the policy? hint: think, is it profitable for the insurance company or not? will they gain (positive expected value) or lose (negative expected value)? if the expected value is negative, remember to show "-" sign. no "+" sign needed for the positive expected value