For a fully discrete 2-year term life insurance on (50), you are given:a. Cash flows are annual.b. The annual gross premium is 250.c. The annual hurdle rate for profit calculation is 10%.d. The profit vector is (-165, 100, 125).e. The profit margin for this insurance is 6%.Calculate the probability that (50) will survive one year.

Given Insurance type : a fully discrete 2-year term life insurance Age : 50 years Annual gross…

Answered: For a fully discrete 2-year term life…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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The diversifiable risk of a portfolio:a. Is correlated with systematic risk.b. Can be made sufficiently small.c. Is zero in the real world.d. Is the risk that investors lose because of transaction costs.
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The accompanying data represent the annual rates of return of two companies' stock for the past 12 years. Complete parts (a) through (k). O A. OB. 0.50- 0.50- 0.00- 0.00- -0.50- -0.50- -0.3 RR of Company 2 0.0 0.3 -0.3 0.0 0.3 RR of Company 1 OC. 0.30- 0.50- 0.00- 0.00- -0.30- -0.50- o.0 0'5 0.0 0.3 -0.5 RR of Company 2 0.5 -0.3 RR of Company 1 (b) Determine the correlation coefficient between rate of return of Company 1 and Company 2. The correlation coefficient is 0.966. (Round to three decimal places as needed.) (c) Based on the scatter diagram and correlation coefficient, is there a linear relation between rate of return of Company 1 and Company 2? Yes No (d) Find the least-squares regression line treating the rate of return of Company 1 as the explanatory variable. y=x+O (Round to four decimal places as needed.) RR of Company 1 RR of Company 1 RR of Company 2 RR of Company 2
1. ABC inc. stock is currently selling for $30, one year from today the stock price can either increase by 20% or decrease by 15%. The probability of an increase in the stock price is equal to 0.3. The one-year risk-free rate is 5% What is the value of a European put that expires in one year with an exercise price of $24. 2. Graphically, show the value and the profit and loss of the following butterfly position: Long in a call with an exercise price of $30, short in 2 calls with an exercise price of $45, and long in a call with an exercise price of 60. All calls are written on the same stock and have the same maturity. 3. "Early exercise of an American option on a stock that does not pay any dividend is not optimal regardless of whether the option is a Call or a Put". True, False, or Uncertain. Explain.
is the following correct?
The following table indicates the unit prices (in Rands) and quantities of three goods purchased every month by a small restaurant for the years 2023 and 2024. GOOD 2023 2024 Unit Price (p0) Quantity (q0)) Unit Price (p1) Quantity (q1) Milk R12.60 2555 R12.85 2705 Eggs R11.00 114 R14.00 107 Flour R65.00 350 R68.50 400 Q.3.1 Using 2023 as the base year, compute the price relative in 2024 for milk and eggs. Interpret your answers. Q.3.2 Using 2023 as the base year, compute the Laspeyres price index for all of the goods for 2024. Interpret your answer. Q.3.3 Using 2023 as the base year, compute the Paasche price index for all of the goods for 2024. Interpret your answer.
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Answer part A and D only!
Q3. Suppose that the market default rate for bonds is given by 0.01, i.e., the probability the market believes that the company may not be able to pay the owner of the bonds is 0.01. Now a credit default swap (CDS) is sold at fair price $ 0.01 per unit. Ackman expects that the true default rate is 0.05, not 0.01. Ackman bought 67 billion units of CDS at the price $ 0.01 per unit. a. Suppose that Ackeman's expectation about the default rate is not correct. I.e., the true default rate for bonds is given by 0.01. Find the cost of the purchase. Find the expected payoff. Find the profit. b. Suppose that Ackeman's expectation is correct. Find the cost of the purchase. Find the expected payoff. Find the profit.
A categorical variable is a continuous variable. Select one: a. False b. True

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