Calculate P using the equivalence principle.
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A: We will prove this using the logical equivalence laws given in the question.
![5.
are given:
i.
ii.
iii.
For a special fully discrete 5-year deferred 3-year term insurance of 100,000 on (x) you
There are two premium payments, each equal to P. The first is paid at the beginning
of the first year and the second is paid at the end of the 5-year deferral period.
The following probabilities:
i = 0.06
5Px = 0.95
9x+5 = 0.02, 9x+6= 0.03,9x+7 = 0.04
Calculate P using the equivalence principle.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcc9eec8a-95f2-45ae-bf29-92bce5d4c5c0%2Fbdb2a3ff-d676-4df3-b5a1-2e2aba0f6a67%2Fbzmrn5a_processed.jpeg&w=3840&q=75)
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- James has an investment worth $175,609.50. The investment will make a special payment of X to James in 1 month from today and the investment also will make regular, fixed monthly payments of $1,440.00 to James forever. The expected return for the investment is 1.23 percent per month and the first regular, fixed monthly payment of $1,440.00 will be made to James in one month from today. What is X, the amount of the special payment that will be made to James in 1 month? An amount less than $58,600.00 or an anmount greater than $179,600.00 An amount equal to or greater than $58,600.00 but less than $88,950.00 An amount equal to or greater than $88,950.00 but less than $146,400.00 An amount equal to or greater than $146,400.00 but less than $176,000.00 O An amount equal to or greater than $176,000.00 but less than $179,600.00 Com SHEMALarry purchased an annuity from N insurance company that promises to pay him $2,000 per month for the rest of his life. Larry paid $210,240 for the annuity. Larry is in good health and is 72 years old. Larry received the first annuity payment of $2,000 this month. How much of the first payment should Larry include in gross income?2. XYZ Company's preferred stock is selling for P 60.00 a share. If the required return is 8%, what will the dividend be two years from now?
- Sahi started a business investing Rs. 75,000. After 3 months, Shikha joined with capital of Rs 60,000. If at 4. the end of the year total the profit was Rs. 16,000 then what was Shikha's share in it? [CMAT 2004] Rs. 5000 b. Rs. 6000 Rs. 8000 d. Rs. 9000 a. С. A sells an article to B at profit of 20% and B sells it to C at a profit of 25%. If C buys it for Rs.225, what did A pay for it? er 5. [CMAT 2006] Rs. 100 b. Rs. 125 Rs. 150 d. Rs. 175 a. C.There is a 0.9983 probability that a randomly selected 27-year-old male lives through the year. A life insurance company charges $198 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $110,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 27-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is $ The value corresponding to not surviving the year is $ (Type integers or decimals. Do not round.) b. If the 27-year-old male purchases the policy, what is his expected value? The expected value is $ (Round to the nearest cent as needed.) c. Can the insurance company expect to make a profit from many such policies? Why? because the insurance company expects to make an average profit of $ on every 27-year-old male it insures for 1 year. nearest cent as needed.) No, Yes,An insurance policy is written to cover damage to a luxury sports car. The amount of damage is uniformly distributed between $0 and $39000. In order to decrease the in- surance premium, the insurance company de- cides to charge an ordinary deductible, d, so that the expected insurance payment with the deductible is 61 % of the expected insurance payment without the deductible. Determine the value of the deductible, d. 1. $8113 2. $8967 3. $8540 4. $7686 5. $7259
- There is a 0.9986 probability that a randomly selected 31-year-old male lives through the year. A life insurance company charges $175 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 31-year-old male, what are the monetary values corresponding to the two events of surviving.the year and not surviving? The value corresponding to surviving the year is $ - 175 The value corresponding to not surviving the year is $ 99,825 (Type integers or decimals. Do not round.) b. If the 31-year-old male purchases the policy, what is his expected value? The expected value is $. (Round to the nearest cent as needed.)A corporate bond that pays 4% per annum semi-annually has a yield of 3% p.a. withcontinuous compounding and a remaining life of 1.5 years (immediate after couponpayment). The yield on a similar risk-free bond is 2% p.a. with continuous compounding. The risk-free rates are 1% p.a. with continuous compounding for all maturities.Assume that the unconditional probability of default per every six months is a constantand that defaults can happen at the end of every six months (immediate before couponpayment). The recovery rate is 40%. Estimate the unconditional probability of defaultusing the “more exact calculation”.An amunt of 1 dollar is deposited in a funding at the beginning of every month for 7 years with 7% annual interest. if the fund is compunded monthly and the amount is paid every month end then what will be the amount deposited after last deposit?
- There is a 0.9985 probability that a randomly selected 31-year-old male lives through the year. A life insurance company charges $189 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $80,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 31-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is $ The value corresponding to not surviving the year is $ (Type integers or decimals. Do not round.) b. If the 31-year-old male purchases the policy, what is his expected value? The expected value is $ (Round to the nearest cent as needed.) c. Can the insurance company expect to make a profit from many such policies? Why? because the insurance company expects to make an average profit of $ on every 31-year-old male it insures for 1 year. (Round to the nearest cent as needed.)There is a 0.9986 probability that a randomly selected 27-year-old male lives through the year. A life insurance company charges $157 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $80,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 27-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is $nothing. The value corresponding to not surviving the year is $nothing. (Type integers or decimals. Do not round.) b. If the 27-year-old male purchases the policy, what is his expected value? The expected value is $nothing. (Round to the nearest cent as needed.) c. Can the insurance company expect to make a profit from many such policies? Why? because the insurance company expects to make an average profit of $nothing on every 27-year-old male it…Q10. For a 20-year deferred annuity-due issued to (45) that pays 150,000 annually for life, you are given: Premiums of G are paid annually during the deferral period. First year commissions are 40% of premium. Commissions for years 2 through 10 are 10% of premium. Commissions for years 11-20 are 5% of premium ä45:10 = 6.25, ä55:10 = 6.00, ä65 = 7.40 10E450.30, 10E55 = 0.27 Premiums are calculated using the equivalence principle. Calculate G.
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