3. Under the surplus-share treaty, how much will the insurance company will have to cover for the client’s claim if the client has a $70,000 claim and the insurance company reinsures every client with a claim amount of at least $50,000 with a maximum claim of $200,000.
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Q3. Under the surplus-share treaty, how much will the insurance company will have to
cover for the client’s claim if the client has a $70,000 claim and the insurance company reinsures
every client with a claim amount of at least $50,000 with a maximum claim of $200,000.
Step by step
Solved in 2 steps
- There is a loss, with 1% probability of default, expected to be between $50 million and $200 million, with equal probability of loss in that range. Determine the fair price of insurance to protect the institution against a loss of over $130 million for this risk.Suppose you purchase one Texas insurance August 75 call contract quoted at R8.50 and write one Texas insurance August 80 call contract quoted at R6. If at expiration, the price of a share of Texas instruments stock is R79, your profit would beWhat is the estimated premium claims outstanding? A. 364,000 B. 840,000 C. 756,000 D. 672,000
- Q3 GT Bank Ghana Limited quotes JPY/EUR 155-165, and GCB Bank quotes EUR/JPY 0.0059-0.0063.Are these quotes identical? If not, is there an opportunity for arbitrage?If there is an opportunity for arbitrage, how would one profit from it?Given the bid-ask quotes for jpy/gbp 220-240, at what rate will:Mr. Agbo purchase gbp? Mr. Agbo sell gbp? Mr. Debrah purchase jpy? Mr. Kwaku sell jpy? Q4 An analyst holds a set of forward contracts on euro, against usd (=hc). Below are the forward prices in the contract; the current forward prices (if available) or at least the current spot rate and interest rates (if no forward is available for this time to maturity). Compute the fair value of the contracts.(a) Purchased: eur 1m 60 days (remaining). Historic rate: 1.350; current rate for same date: 1.500; risk-free rates (simple per annum): 3% in usd, 4% in euro. (b) Purchased: eur 2.5m 75 days (remaining). Historic rate: 1.300; current spot rate: 1.5025; risk-free rates (simple per annum): 3% in usd,…Q4 An analyst holds a set of forward contracts on euro, against usd (=hc). Compute the fair value of the contracts.(a) Purchased: eur 1m 60 days (remaining). Historic rate: 1.350; current rate for same date: 1.500; risk-free rates (simple per annum): 3% in usd, 4% in euro. (b) Purchased: eur 2.5m 75 days (remaining). Historic rate: 1.300; current spot rate: 1.5025; risk-free rates (simple per annum): 3% in usd, 4% in euro. (c) Sold: eur 0.75m 180 days (remaining). Historic rate: 1.400; current rate for same date: 1.495; risk-free rates (simple per annum): 3% in usd, 4% in euro.Investment Bankers Association (IBA) has an agreement with Northern Airlinesto underwrite an equity issue with a market value equal to $11 million.a. If IBA’s underwriting fee is 5 percent and its out-of-pocket expenses associatedwith the issue are $125,000, what is the net amount that IBA will receiveunder its agreement with Northern?b. Assuming that the information in part (a) does not change and Northernincurs out-of-pocket expenses equal to $240,000 for items such asprinting, legal fees, and so on, what will be the net proceeds from theequity issue for Northern?
- An insurance contract has a straight deductible worth 100BD, additionally it also has a coinsurance agreement which specifies that a 21% coinsurance clause exists on a car valued at 30,107 BD. Based on this, if a loss worth 14,713 happens, how much will the insurer pay?1) How much is the transaction price when the contract was entered into on July 1, 2021? 20,825,000 20,780,000 20,390,000 20,705,000. GT Bank Ghana Limited quotes JPY/EUR 155-165, and GCB Bank quotes EUR/JPY0.0059-0.0063a. Are these quotes identical? b. If not, is there an opportunity for arbitrage? c. If there is an opportunity for arbitrage, how would one profit from it? 3. Given the bid-ask quotes for jpy/gbp 220-240, at what rate will:(a) Mr. Agbo purchase gbp? (b) Mr. Agbo sell gbp? (c) Mr. Debrah purchase jpy?(d) Mr. Kwaku sell jpy?
- 3. Consider the buyer of a FRA 6-9. The contract rate is 6.35% on a notional amount of $10 million. Calculate the settlement amount of the seller if the settlement rate is 6.85%. Assume a 30/360 day count basis.Carter Enterprises can issue floating-rate debt at LIBOR + 2% or fixed-ratedebt at 10%. Brence Manufacturing can issue floating-rate debt at LIBOR +3.1% or fixed-rate debt at 11%. Suppose Carter issues floating-rate debt andBrence issues fixed-rate debt. They are considering a swap in which Cartermakes a fixed-rate payment of 7.95% to Brence and Brence makes a payment of LIBOR to Carter. What are the net payments of Carter and Brence ifthey engage in the swap? Would Carter be better off if it issued fixed-ratedebt or if it issued floating-rate debt and engaged in the swap? Would Brencebe better off if it issued floating-rate debt or if it issued fixed-rate debt andengaged in the swap? Explain your answers.In 2022 before the LME nickel crisis, what was Tshingshan Holding groups position? Did they short the nickel itself ie borrow nickel and sell it and then in the future repurchase it or did they short future contracts for nickel ie agree to sell nickel at certain price in future?
