CAS Exam 6C Fall 2014, Question 12
Study guide: Exam 6C
The Agricultural Policy Framework is comprised of two business risk management programs: Production Insurance Program and the Canadian Agricultural Income Stabilization Program (CAIS).
A farmer participates in both programs. A significant frost occurs and results in losses in production to the farmer.
The following information is available:
| Item | Value |
|---|---|
| Historical average yield | 100,000 units |
| Actual yield | 50,000 units |
| Chosen level of coverage | 80% production guarantee |
| Initial price per unit | $3.00 |
| Final market price at harvest of unit | $2.25 |
| Claim settlement basis | "at harvest prices" |
Part a (0.5 points)
Determine the payment from the Production Insurance Program.
Part b (1.5 points)
Identify and briefly describe three optional coverages that are available under the Production Insurance Program.
Answer this question and see the worked solution