The expected return on a life insurance policy. The Expected return: The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns. Life Insurance Policy: Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.

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Answer 1

Question

Chapter 8, Problem 3Q

a)

Summary Introduction

To explain: The expected return on a life insurance policy.

The Expected return:

The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns.

Life Insurance Policy:

Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.

b.

Summary Introduction

To explain: The correlation coefficient between the return on the insurance policy and the return on the human capital.

Correlation Coefficient:

A correlation coefficient is a tool of statistical measure. This tool measures the relation between the two variables. It measures how the change in one value of variable affects the other.

c.

Summary Introduction

To explain: The reason for buying the life insurance in spite of low expected returns.

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1. Complete the following table showing effects of changes in retirement "risk variables" on periodic work-life retirement investment contributions required to meet a retirement need (assuming all else equal). Factor: Effect if factor increases: Effect if factor decreases: Inflation Rate Investment Return Rate Work Life Expectancy Retirement Life Expectancy Retirement Lifestyle

CHAPTER 2 ASSIGNMENT Your client is having trouble figuring out where all her money goes each month. Here is her financial information for you to review: $355* STOCKS IN BROKERAGE ACCT $5,500 MASTER CARD BILL $245* MONTHLY PAYCHECK (GROSS) $3,000 PAYROLL TAX WITHHELD $ 600 MONTHLY MORTGAGE PAYMENT $530 MUTUAL FUNDS $2,100 401(K) RETIREMENT ACCT $4,500 $265 $275* SAVINGS ACCT BALANCE $2,300 MONTHLY CLOTHING EXPENSES $45 MONTHLY VISA BILL MONTHLY CAR PAYMENT MONTHLY UTILITY BILL CHECKING ACCOUNT BALANCE QUARTERLY AUTO INSURANCE (NOT YET DUE) ANTIQUE COIN COLLECTION CONDOMINIUM MONTHLY GROCERIES AUTOMOBILE FURNITURE MORTGAGE BALANCE AUTO LOAN BALANCE OTHER PERSONAL PROPERTY OTHER MONTHLY CASH EXPENSES ANNUAL MEDICAL EXPENSES *Bills represent the average of the prior month's charges AND ALSO current month's expenses. $825 $450 $3,250 $65,000 $225 $9,000 $5,500 $50,000 $4,225 $8,000 $150 $264

Answer 2

Question

Chapter 8, Problem 3Q

a)

Summary Introduction

To explain: The expected return on a life insurance policy.

The Expected return:

The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns.

Life Insurance Policy:

Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.

b.

Summary Introduction

To explain: The correlation coefficient between the return on the insurance policy and the return on the human capital.

Correlation Coefficient:

A correlation coefficient is a tool of statistical measure. This tool measures the relation between the two variables. It measures how the change in one value of variable affects the other.

c.

Summary Introduction

To explain: The reason for buying the life insurance in spite of low expected returns.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 3Q

a)

Summary Introduction

To explain: The expected return on a life insurance policy.

The Expected return:

The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns.

Life Insurance Policy:

Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.

b.

Summary Introduction

To explain: The correlation coefficient between the return on the insurance policy and the return on the human capital.

Correlation Coefficient:

A correlation coefficient is a tool of statistical measure. This tool measures the relation between the two variables. It measures how the change in one value of variable affects the other.

c.

Summary Introduction

To explain: The reason for buying the life insurance in spite of low expected returns.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 8, Problem 3Q

a)

Summary Introduction

To explain: The expected return on a life insurance policy.

The Expected return:

The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns.

Life Insurance Policy:

Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.

b.

Summary Introduction

To explain: The correlation coefficient between the return on the insurance policy and the return on the human capital.

Correlation Coefficient:

A correlation coefficient is a tool of statistical measure. This tool measures the relation between the two variables. It measures how the change in one value of variable affects the other.

c.

Summary Introduction

To explain: The reason for buying the life insurance in spite of low expected returns.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 3Q

a)

Summary Introduction

To explain: The expected return on a life insurance policy.

The Expected return:

The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns.

Life Insurance Policy:

Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.

b.

Summary Introduction

To explain: The correlation coefficient between the return on the insurance policy and the return on the human capital.

Correlation Coefficient:

A correlation coefficient is a tool of statistical measure. This tool measures the relation between the two variables. It measures how the change in one value of variable affects the other.

c.

Summary Introduction

To explain: The reason for buying the life insurance in spite of low expected returns.

Answer 6

Chapter 8, Problem 3Q

a)

Summary Introduction

To explain: The expected return on a life insurance policy.

The Expected return:

The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns.

Life Insurance Policy:

Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.

Answer 7

Chapter 8, Problem 3Q

a)

Summary Introduction

To explain: The expected return on a life insurance policy.

The Expected return:

The expected return on an investment refers to the weighted average of estimated returns and estimation of occurrence of those returns.

Life Insurance Policy:

Life insurance policy is an agreement between two parties, the two parties are the insurance company and the policy buyer. The insurance company depicts to pay a predetermined amount to the policy holder in case of specified future events.

Answer 8

b.

Summary Introduction

To explain: The correlation coefficient between the return on the insurance policy and the return on the human capital.

Correlation Coefficient:

A correlation coefficient is a tool of statistical measure. This tool measures the relation between the two variables. It measures how the change in one value of variable affects the other.

Answer 9

b.

Summary Introduction

To explain: The correlation coefficient between the return on the insurance policy and the return on the human capital.

Correlation Coefficient:

A correlation coefficient is a tool of statistical measure. This tool measures the relation between the two variables. It measures how the change in one value of variable affects the other.

Answer 10

c.

Summary Introduction

To explain: The reason for buying the life insurance in spite of low expected returns.

Answer 11

c.

Summary Introduction

To explain: The reason for buying the life insurance in spite of low expected returns.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 8 - Suppose you owned a portfolio consisting of...Ch. 8 - Prob. 2Q Ch. 8 - Prob. 3Q Ch. 8 - Is it possible to construct a portfolio of...Ch. 8 - Stock A has an expected return of 7%, a standard...Ch. 8 - A stock had a 12% return last year, a year when...Ch. 8 - If investors aversion to risk increased, would the...Ch. 8 - Prob. 8Q Ch. 8 - In Chapter 7, we saw that if the market interest...Ch. 8 - Prob. 1P

To explain: The reason for buying the life insurance in spite of low expected returns.

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Chapter 8 Solutions