a)RDR= risk-free rate+ margin for risk. How does RDR relate to the investment return? That is the i in (Premiums-Expenses)*(1+i). b)Why do shareholders require a high RDR? c)Is RDR used to determine the VIF and present value of share price?
RDR can be viewed in different ways; but one way is to think of of it as return required by the shareholders, as opposed to your i which is the return expected on your assets. b. the more profit the better - compensation for tying up capital and taking risk c. can be - but will have different RDRs for different purposes (and many ways to value a share price)
