Raffle Risk Valuation in With-Raffle Savings Account

Eduardo Fraga Lima de Melo (), Sergio Luis Franklin () and César da Rocha Neves ()
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Eduardo Fraga Lima de Melo: Superintendency of Private Insurance (SUSEP) and Rio de Janeiro State University (UERJ)
Sergio Luis Franklin: Superintendency of Private Insurance (SUSEP) and Pontifical Catholic University of Rio de Janeiro (PUC-Rio)
César da Rocha Neves: Pontifical Catholic University of Rio de Janeiro (PUC-Rio), Rio de Janeiro State University (UERJ), and Superintendency of Private Insurance (SUSEP)

Brazilian Review of Finance, 2012, vol. 10, issue 2, 197-213

Abstract: In this paper we present an approach for the assessment of raffle risk found in with-raffle savings account, a type of product offered by with-raffle savings societies. This risk can be defined as the possibility of losses due to the commitment to pay prizes above the expected value. It concerns the selling of the product to few investors and the uncertainty in the value paid by them, which is positively related to the prize the savings society must pay. Our results provide a simple valuation formula for practioners involved in this specific industry.

Keywords: raffle risk; with-raffle savings account; with-raffle savings society (search for similar items in EconPapers)
JEL-codes: C13 G29 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:brf:journl:v:10:y:2012:i:2:p:197-213

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