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1. An insurance company collected $31.0 million in premiums and disbursed $28 million in losses. Loss adjustment expenses amounted to $5.0 million. The firm is profitable

A. if dividends paid to policyholders is $4 million and income generated on investments is $4 million.

B. if dividends paid to policyholders is $10 million and income generated on investments is $14 million.

C. if dividends paid to policyholders is $6 million and income generated on investments is $2 million.

D. if dividends paid to policyholders is $10 million and income generated on investments is $4 million.

E. if dividends paid to policyholders is $4 million and income generated on investments is $2 million.

2.

You start an annuity with $1million and expect to receive 12 equal payments beginning at the end of the first year.

The guaranteed annual interest rate is 8 percent. The annual payments that you expect to collect are

A. $88,333.33.

B. $119,277.03.

C. $126,368.71.

D. $132,695.02.

E. $144,250.52.

3.

Calculate the annual cash flows of a $2 million, 10-year fixed-payment annuity earning a guaranteed 6 percent annually if the payments are to begin at the end of the year.

A. $137,990.27.

B. $271,735.92.

C. $275,980.53.

D. $280,000.00.

E. $298,058.98.