New Agriculture Research Reported from Feng Chia University (Pricing The Revenue Insurance of Sugar Apple And Banana in Taiwan: An Actuarial Approach)

2021 MAY 26 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- New research on agriculture is the subject of a new report. According to news reporting originating from Feng Chia University by NewsRx correspondents, research stated, “This paper uses Fratini’s (2017) actuarial approach and the traditional risk neutral approach to price the revenue insurance under the framework of Black Scholes put option pricing.”

Our news editors obtained a quote from the research from Feng Chia University: “Then, we extend the pricing to include a coverage limit. Further, we also decompose the revenue into price and yield and develop another pricing formula using the price and yield information. The risk neutral approach assumes that the underlying revenue is tradable while the actuarial approach assumes the revenue risk is diversifiable. We compute the premiums of the revenue insurance of sugar apple and banana in Taiwan. The results show that the premiums of the actuarial approach are generally lower than the risk neutral approach.”

According to the news editors, the research concluded: “Because revenue is often non-tradable, thus, if the individual revenue risk can be fully diversified, then the actuarial approach should be suggested for premiums calculation.”

For more information on this research see: Pricing The Revenue Insurance of Sugar Apple And Banana in Taiwan: An Actuarial Approach. International Journal of Food and Agricultural Economics, 2021,9(2):109-123. (International Journal of Food and Agricultural Economics - http://www.foodandagriculturejournal.com/). The publisher for International Journal of Food and Agricultural Economics is International Journal of Food and Agricultural Economics.

Our news journalists report that additional information may be obtained by contacting Min-Hsien Yang, Feng Chia University, Department of International Business, Taiwan. Additional authors for this research include Richard Lu, Matt Lin, Nian-Zu Yao.

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