Which of the following statements regarding policy dividends is CORRECT?
A) They are not available to insureds after a specified age, such as 60.
B) They are the difference between the gross premium charged and the actual experience of the insurer.
C) Though they may vary from year to year, they are guaranteed to be paid each year.
D) They are issued on nonparticipating policies."
Ans: B) They are the difference between the gross premium charged and the actual experience of the insurer.
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Indicate whether the statement is true or false.
Andre owns a corporate bond with a coupon rate of 8% that matures in 10 years. Ruth owns a
corporate bond with a coupon rate of 12% that matures in 25 years. If interest rates go down, then A) the value of both bonds will increase. B) the value of both bonds will remain the same because they were both purchased in an earlier time period before the interest rate changed. C) the value of Ruth's bond will decrease more than the value of Andre's bond due to the longer time to maturity. D) the value of Andre's bond will decrease and the value of Ruth's bond will increase.