Which of the following is the best example of risk transfer?
A)
Purchasing life insurance
B)
Paying a chimney sweep to clean your chimney
C)
Flying instead of driving your car
D)
Increasing the deductible on your auto insurance policy
A
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Calculate the amount to be received at the end of year 1 that is equivalent to $150 at the end of year 1, $450 at the end of year 2, and $300 at the end of year 3, given a discount rate of 10%
A) $807 B) $817 C) $887 D) $975 E) $1,331
Bank One currently charges a 10 percent simple rate on a car loan where the interest is compounded semiannually. Bank Two offers a car loan where the interest is compounded quarterly. What simple rate would Bank Two have to charge in order to earn the same effective annual rate that is earned by Bank One?
a. 9.25% b. 9.88% c. 10.00% d. 10.25% e. 10.42%