23. The elimination period under Ruth's LTCI policy is 30 days, while Rebecca's policyspecifies an elimination period of 180 days. Everything else being equal, what can beexpected regarding their respective premiums?O a. Ruth's premium will be higher than Rebecca's.ob. Rebecca's premium will be higher than Ruth's.OC. Rebecca's premium will decline over the term of her policy.od. The length of the elimination period has no bearing on an LTCI policy's premium.24. Patricia has become unable to perform several ADLS, but before a determination canbe made regarding her qualifications to receive long-term care insurance benefits, theinsurer requires that her physician create a written plan of care. What role is Patricia'sdoctor taking?oa. gatekeeperob. custodianOc. responsible partyod. fiduciary25. Amanda and Arnold both have $450,000 in assets, and each purchases a partnership-qualified LTCI policy with a $300,000 maximum benefit. Amanda's partnership programuses the dollar-for-dollar offset method, and Arnold's program uses the total assetapproach. Which of the following statements is true?o a. Each will be able to protect their full $450,000 in assets from Medicaid's spend-down requirement.ob. Arnold will be able to protect a greater portion of his assets than Amanda.OC. Amanda will be able to add the cost of her LTCI policy premiums to the dollaramount of assets that will be protected from Medicaid's spend-down requirement.od. Amanda will be able to protect a greater portion of her assets than Arnold.

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23. The elimination period under Ruth's LTCI policy is 30 days, while Rebecca's policy specifies an elimination period of 180 days. Everything else being equal, what can be expected regarding their respective premiums? O a. Ruth's premium will be higher than Rebecca's. ob. Rebecca's premium will be higher than Ruth's. O C. Rebecca's premium will decline over the term of her policy. od. The length of the elimination period has no bearing on an LTCI policy's premium.

23. The elimination period under Ruth's LTCI policy is 30 days, while Rebecca's policy specifies an elimination period of 180 days. Everything else being equal, what can be expected regarding their respective premiums? O a. Ruth's premium will be higher than Rebecca's. ob. Rebecca's premium will be higher than Ruth's. O C. Rebecca's premium will decline over the term of her policy. od. The length of the elimination period has no bearing on an LTCI policy's premium.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A company charges a net single premium of S6,000 for a life insurance policy with face amount $25,000. The force of interest for this policy is 4 Find the probability that the company makes a profit if Benefit paid at the moment of death and the survival function is So(t) = 1- for 0
12. There is only one floor plan at Apple Apartments. The first floor rents for $900, the second floor rents for $800 and the third floor rents for $975. If you sign a 13-month lease you get the first month free (there's no option to prorate the savings.) There is a $250 admin fee, $25 key deposit and $75 application fee. How should the Rent, Special Type, Special Amount and Lease Term be entered? Special Type Rent 1 2 3 4 Special Amount Lease Term Lease Special Type Special Rent Term Amount month month 800 1 - No special: a. 12 938 3-One times 938 13 b.
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:1R1 = 2.62%, E(2r1) = 3.90%, E(3r1) = 4.40%, E(4r1) = 5.90%Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
If your supplier offers 3/5 net 28, what is the implied interestrate if you choose to forgo the discount and pay on day 28?
A company has offered you two different payment plans for purchasing a product, • Option A. 15% down payment (of the total price) and 10 annual payments of $1,200.• Option B. No down payment and 12 annual payments of $ 1,500.Treat the down payment as occurring at Year 0. Assume an interest rate of 8% per year. a. What is the down payment of Option A?b. What is the price paid for the product under Option A?c. What is the price paid for the product under Option B?d. Which payment option should be selected, A or B?e. Briefly explain why someone might choose the option that has the larger sale price.
Your child's orthodontist offers you two alternative payment plans. The first plan requires a $4,000 immediate up-front payment. The second plan requires you to make monthly payments of $137.41, payable at the end of each month for 3 years. What nominal annual interest rate is built into the monthly payment plan? a. 15.25% b. 7.34% c. 25.86% d. 11.42% e. 14.36%
Ay 2. You have entered into a 4/7 FRA at a rate of 5.9%. There are 91 days in the FRA period. After three months, the FRA is now a 1/4 FRA. If the three-month Libor rate is 6.4%, and the six-month Libor rate is 7.2%, what is the current value of the FRA? Assume that the number of days in the first month is 30 and the notional amount of the FRA is $ 10,000,000. What is the FRA value?
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Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:1R1 = 2.62%, E(2r1) = 3.90%, E(3r1) = 4.40%, E(4r1) = 5.90%Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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12. A chooser option expires in 6 months, but the owner must make the choice in 4 months. The strike price is $27 and the underlying asset is currently worth $25.88. A call option that expires in 6 months (same underlying asset, strike price = $27) has a premium of $4.63 and an identical put has a premium of $4.99. An otherwise identical call that expires in 4 months costs $3.69 and its put option counterpart costs $4.30. What should be the premium for this chooser option?

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