Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A special fully continuous whole life insurance pays a benefit of 1000 plus a refund of all premiums without interest at the moment of death . We are given μ=0.01 and δ=0.05. Calculate the annual premium.
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- refers to receiving a set monthly payment for the rest of your life. O Certain Period Annuity O Single Life Annuity O Joint & Survivor Annuity O Lump-sum Annuityarrow_forwardA 6-year term insurance policy has an annual premium of $500, and at the end of 6 years, all payments and interest are refunded. What lump-sum deposit is necessary to equal this amount if you assume an interest rate of 2.5% compounded annually? (a) State the type. future value present value of an annuity sinking fund amortization ordinary annuity (b) Answer the question. (Round your answer to the nearest cent.) $arrow_forwardUsing Table 19-1 and Table 19-2, calculate the annual, semiannual, quarterly, and monthly premiums (in $) for the life insurance policy. Round your answers to the nearest cent. Age 18 19 20 21 22 Face Value of Policy 23 24 25 26 27 28 29 30 TABLE 19-1 Annual Life Insurance Premiums (per $1,000 of Face Value) 35 40 $45,000 45 50 55 60 5-Year Term Male $2.32 2.38 243 2.49 2.55 2.62 32.69 2.77 2.84 2.90 2.98 3.07 3.14 Sex and Age of Insured 3.43 4.23 6.12 9.72 16.25 24.10 Term Insurance Female $ 1.90 1.96 2.07 2.15 2.22 2.30 2.37 2.45 2.51 2.58 male-50 2.64 2.70 2.78 2.92 3.90 5.18 8.73 12.82 19.43 10-Year Term 4.57 4.64 4.70 4.79 4.85 Male Female $4.33 $4.01 4.42 4.12 4.49 4.20 4.92 5.11 5.18 5.23 5.30 Type of Policy 6.42 7.14 8.81 14.19 22.03 37.70 20-payment life 4.29 4.36 4.42 4.47 4.51 4.60 4.69 4.77 4.84 4.93 5.35 6.24 7.40 9.11 13.17 24.82 Whole Life Male Female $11.17 $13.22 13.60 11.68 14.12 12.09 14.53 14.97 15.39 15.90 16.38 16.91 17.27 17.76 18.12 18.54 24.19 27.21 33.02 37.94…arrow_forward
- Use a calculator to evaluate an ordinary annuity formula nt - 1 1 + - A = m n for m, r, and t (respectively). Assume monthly payments. (Round your answer to the nearest cent.) $100; 7%; 10 yr A = $arrow_forwardFind the following values assuming a regular, or ordinary, annuity: a. The present value of $400 per year for ten years at 10 percent. b. The future value of $400 per year for ten years at 10 percent. c. The present value of $200 per year for five years at 5 percent.d. The future value of $200 per year for five years at 5 percent.Repeat Problem above but assume the annuities are annuities due.(Dollar signs, decimal places, and commas all matter)arrow_forwardAn [Select] is a sequence of equal period payments. If payments are made at the end of each time interval, the annuity is called an [Select]arrow_forward
- Consider the following case Amount of Annuity: $26,000 Interest Rate: 12% Period of years: 12 Calculate the present value of the annuity assuming that is it a oridinary annuity and a annuity due.arrow_forwardFor life insurance policies, some of the premium pays for the cost of the insurance, and the remainder goes toward the cash value of the policy and earns interest like a savings account. Consider the following insurance company options. Company 1: pays 4.2% compounded monthly on the cash value of their policies Company 2: pays 4.21% compounded semiannually on the cash value of their policies What is the APY offered by each company? (Round your answers to the nearest hundredth.) Company 1 % Company 2 %arrow_forwardFind the PV of an ordinary annuity that pays $1,000 each of the next 6 years if the interest rate is 16%. Then find the FV of that same annuity. Round your answers to the nearest cent. PV of ordinary annuity: $ fill in the blank 25 FV of ordinary annuity: $ fill in the blank 26 g. How will the PV and FV of the annuity in part f change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent. PV of annuity due: $ fill in the blank 27 FV of annuity due: $ fill in the blank 28arrow_forward
- 9. Define out of pocket maximum. a. A flat-rate fee you must pay when receiving any kind of health care service. b. The maximum amount of money your insurance will cover of a certain health care service. c. The maximum amount you will have to pay out of pocket in one year for the benefits your insurance covers. d. The maximum amount of money the insured party will pay toward prescription medications.arrow_forwardWhich one of the following statements regarding annuities is NOT true? OA) A joint and full survivor annuity guarantees a level payment as long as either annuitant is alive OB) A single-premium variable deferred annuity generally permits additions to the invested amount once each year C) A flexible premium variable annuity generally limits changes in the investment mixto some extent. D) A life annuity with ten years certain and continuous will pay benefits for at least ten years if the annuitant dies six years after the initial distribution is madearrow_forwardListen The future value of an annuity due is: one period after the final payment. one period before the final payment. at the same point in time as the final payment.arrow_forward
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