Two lives aged x and y take out a policy that will pay out 15,000 on...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Two lives aged x and y take out a policy that will pay out £15,000 on the death of (x) provided that (y) has died at least 5 years earlier and no more than 15 years earlier. (1) Express the present value of this benefit in terms of the random variables denoting the future lifetimes of (x) and (y). [2] (ii) Give an integral expression (in terms of single integrals only) for the expected present value of the benefit. [3] (iii) Prove that the expected present value is equal to: 15,000 PX S 15PX Sy] v³5 Px sy -pls [3] (iv) State the appropriate premium payment term for this policy, assuming premiums are to be paid annually in advance... [2] [Total 10] Two lives aged x and y take out a policy that will pay out £15,000 on the death of (x) provided that (y) has died at least 5 years earlier and no more than 15 years earlier. (1) Express the present value of this benefit in terms of the random variables denoting the future lifetimes of (x) and (y). [2] (ii) Give an integral expression (in terms of single integrals only) for the expected present value of the benefit. [3] (iii) Prove that the expected present value is equal to: 15,000 PX S 15PX Sy] v³5 Px sy -pls [3] (iv) State the appropriate premium payment term for this policy, assuming premiums are to be paid annually in advance... [2] [Total 10]
Expert Answer:
Answer rating: 100% (QA)
i The present value of the benefit can be expressed in terms of the random variables denoting the fu... View the full answer
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
1. Hannah is applying for a life policy on her girlfriend Sarahs life. The policy is $500,000 and carries a large premium. Hannah is the main earner, so she is concerned about not being able to pay...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
ECB Co. has 1.2 million shares outstanding selling at $24 per share. It plans to repurchase 97,000 shares at the market price. What will be its market capitalization after the repurchase? What will...
-
BONDS ISSUED AT FACE VALUE R & R Collectibles issued the following bonds: Date of issue and sale: .......April 1, 20-1 Principal amount: ...........$500,000 Sale price of bonds: ........100...
-
In what month and year did Adelphia file for bankruptcy?
-
Refer to the event tree in Figure 3.10 and the data in Table 3.6. Suppose the company operating this CSTR decides to hire an expert operator in response to the runaway reaction in April. This...
-
Suppose Congress enacted new tax law changes that would (1) permit equipment to be depreciated over a shorter period, (2) lower corporate tax rates, and (3) reinstate the investment tax credit....
-
The growth rate for the firm's common stock is 7%. The firm's preferred stock is paying an annual dividend of $5. What is the preferred stock price if the required rate of return is 8%?
-
City Tours Ltd. needs to update the database on a regular basis. As a customer service manager for the company, you need to add new customers and confirmations, update basic costs, delete...
-
A mild steel pin-ended column is 2.5m long and has the cross-section shown in Fig. P.18.7. If the yield stress in compression of mild steel is 300N/mm2, determine the maximum load the column can...
-
How we can use cultural differences as a tool in bringing all cultures together rather than breaking them apart.
-
use the ln below to Fill the chart and answers the below questions :: https://s22.q4cdn.com/148529933/files/doc_financials/2020/ar/Fiscal2020_RootsAnnualReport_DigitalVersion-FINAL.pdf 1. Fill in...
-
Compose and post a thread of at least 500 words , in which you compare and contrast Tita and her two sisters, Rosaura and Gertrudis. Comment specifically on the differences in their personalities,...
-
Pharoah Corporation earned revenues of $224800, incurred expenses of $233000, and paid dividends of $4350 during the current year. When Income Summary is closed to Retained Earnings What is the debit...
-
Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Cost Pool...
-
Start your valuation analysis with the estimation of expected return using CAPM. You need 3 inputs to calculate the CAPM expected return. 1. An Estimate of the company's Beta Use the daily closing...
-
Is it a breach of fiduciary duty for a director of a real estate investment trust (REIT) negotiating a joint venture on behalf of the REIT with another director for the development of a portfolio of...
-
You are researching Time Manufacturing and have found the following accounting statement of cash flows for the most recent year. You also know that the company paid $ 98 million in current taxes and...
-
What is the NAL for Wildcat? What is the maximum lease payment that would be acceptable to the company? The Wildcat Oil Company is trying to decide whether to lease or buy a new computer-assisted...
-
Applied Nanotech is thinking about introducing a new surface cleaning machine. The marketing department has come up with the estimate that Applied Nanotech can sell 15 units per year at $305,000 net...
-
Dunkirk Consulting wishes to predict the amount of overhead expense that will be incurred by a consulting contract, to develop more accurate bids for future con- tracts. Dunkirk has the following...
-
Block Commodities has gathered the following information concerning rock salt deliveries to its clients, which it believes are highly seasonal: a. Suppose Block Commodities calculated a set of...
-
The service center at a large automobile dealership is trying to boost revenue by pro- viding no-appointment-necessary oil changes to any type of vehicle that stops by the service center. To quickly...
Study smarter with the SolutionInn App