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Q1:2. Compare a stock insurer to a mutual insurer with respect to each of the following: a. Parties who legally own the company b. Right to assess policyholders additional premiums c. Right of policyholders to elect the board of directorsSee Answer
Q2:3. A luncheon speaker stated, "The number of life insurers has declined sharply during the past decade because of the increase in company mergers and acquisitions, demutualization of insurers, and formation of mutual holding companies." a. Why have mergers and acquisitions among insurers increased over time? b. What is the meaning of demutualization? c. Briefly explain the advantages of demutualization of a mutual life insurer. d. What is a mutual holding company? e. What are the advantages of a mutual holding company to an insurer?See Answer
Q3:4. A newspaper reporter wrote, "Lloyd's is an association that provides physical facilities and services to the members for selling insurance. The insurance is underwritten by various syndicates who belong to Lloyd's." Describe Lloyd's Corporation with respect to each of the following: a. Liability of individual members and corporations b. Types of insurance written c. Financial safeguards to protect insuredsSee Answer
Q4:5. Property and casualty insurance can be marketed under different marketing systems. Compare the independent agency system with the exclusive agency system with respect to each of the following: a. Number of insurers represented by the agent b. Ownership of policy expirationsSee Answer
Q5: Write the cash flow equivalence equationas a moment equation for Problem 4-15. (a) About Year 4 (b) About Year 5See Answer
Q6: Consider the following cash flow: Which of the equations below is correct to computethe present value of the cash flows at 8% interest? \text { A. } P=1000(P / A, i, 8)-150(P / G, i, 8)+ 150(P / G, i, 4)(P / F, i, 4) B. P= 400(P/A, i, 8) +600(P/A, i, 5) – 150(P/G, i, 4) C. P= 150(P/G, i, 4) + 850(P/A, i,4) + 400(P/A, i, 4)(P/F,i,4)See Answer
Q7: 9. Discuss what is the purpose of conducting the stratified random sampling?See Answer
Q8: Which statement below is incorrect? A. If the market is efficient, stocks respond immediately to the public releases of relevant news. B. Compared to the field experiment, it is easier for the lab experiment to control for the impact ofalternative theories. C. PACF captures the direct correlation while ACF captures both direct and indirect correlations. D. Short-selling is equivalent to borrowing money from the bank.See Answer
Q9: EJH Company is an all-equity firm that has a market capitalization of $1.3 billion and10 million shares outstanding. It plans to distribute $120 million excess cash through an open market repurchase. Assuming perfect capital markets: What will the price per share of EJH be right before the repurchase? How many shares will be repurchased? What will the price per share of EJH be right after the repurchase? Assume that EJH makes a surprise announcement by distributing $120 million excess cash through a special cash dividend instead of a share repurchase. What is the dividend per share and what is the stock price after the ex-dividend date?See Answer
Q10: Larsen Company manufactures car seats in its San Antonio plant. Each car seat passes through the assembly department and the testing department. This problemfocuses on the assembly department. The process-costing system at Larsen Company has a single direct-cost category (direct materials) and a single indirect-costcategory (conversion costs). Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. When the assemblydepartment finishes work on each car seat, it is immediately transferred to testing. Larsen Company uses the weighted-average method of process costing. Data for the assembly department for October 2017 are as follows: 1. For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule. 2. What issues should the manager focus on when reviewing the equivalent units calculation? 3. For each cost category, summarize total assembly department costs for October 2017 and calculate the cost per equivalent unit. 4. Assign costs to units completed and transferred out and to units in ending work in process.See Answer
Q11: Question 5a (2 marks): Another word for non-investment grade bonds in the US is: Question 5b (2 marks): Investment grade debt has a credit rating greater than or equal to: AAA,АА+, АА, АA-, А+, А, А-, ввв+, Вв, "ВВ-, Bв*, в, вв-, В+, В, В-? Question 5c (1 marks): The European Sovereign Debt Crisis was caused by problems inwhich type of debt?Household, Corporate, Local government, or Federal government. Question 5d (2 marks): The US is unusual for having a large non-investment grade bondmarket. Most countries including China do not. If riskier firms cannot issue bonds in China,how can they borrow?See Answer
Q12: Question 2 (total of 15 marks): Your friend entered into some derivative contracts. She: Bought two 1 year CME American put options on gold at a strike price of $1300 perounce for a premium of $160 per ounce, then; Bought one 1 year CME futures contract on gold at a futures price of $1200 per ounce.The spot gold price is $1190 per ounce. Question 2a (11 marks): Draw the strategy on a graph below with profits on the y-axis andthe underlying gold price on the x-axis. Mark every detail possible on the graph, including the strike prices, breakeven points,maximum possible loss and the current level of the index. Question 2b (1 marks): What is or are the break-even (zero profit) point(s)? Question 2c (1 marks): What is the maximum possible loss on this option strategy? Question 2d (1 marks): What is the maximum possible profit on this option strategy? Question 2e (1 marks): Will your friend make a large profit if the underlying asset pricerises, falls, or stays the same?See Answer
Q13: Question 4: Crypto-currencies such as Bitcoin have had notoriously volatile prices."Stablecoins', on the other hand, such as the proposed Libra currency, should not have thisproblem, Stablecoins may therefore fulfil what function of money? (a) Medium of exchange. (b) Measure of value. (c) Store of value. (e) Standard of deferred payment.See Answer
Q14: Q4a. Compute excess returns for the market, i.e. market risk premium as R = Rm – Rrf,where Rm is the return on the All Ords computed in question 3, and Rrf represents the monthly return on the 30 day bank accepted bill rate. Also compute excess return for each wow and ANZ as follows Rwow = Rwow – Rrf and RåNZ = RANZ - Rrf. Use the 01/11/2010 -01/09/2020 time period. : Q4b. Obtain CAPM betas for both WOW and ANZ using excess returns by estimating the following regressions \begin{array}{c} R_{W O W}^{e}=\alpha_{W O W}+\beta_{W O W} R_{m}^{e}+u_{W O W} \\ R_{A N Z}^{e}=\alpha_{A N Z}+\beta_{A N Z} R_{m}^{e}+u_{A N Z} \end{array} where (u wow) and (u ANZ) are the random error terms of the regression models. Q4c. Present and comment on the two beta coefficients estimated in question 4b. What do they imply about the amounts of systematic risk? Note: provide final answer in 4 decimal places Q4d. Compute the expected returns for WOW and ANZ using the CAPM, i.e. \begin{aligned} E\left(R_{\text {IWOW }}\right) &=R_{r f}+\beta_{\text {Wow }}\left(E\left(R_{m}\right)-R_{r f}\right) \\ E\left(R_{A N Z}\right) &=R_{r f}+\beta_{A N Z}\left(E\left(R_{m}\right)-R_{r f}\right) \end{aligned} Where: • Rrf is the average of the monthly risk free rate computed in question 3 • E(Rm) is the average of the market return computed in question 3 Q4 e. Assume you buy one share of WOW and one share of ANZ on 1/01/2019 and sell the shares on 1/12/2019. Calculate your holding period return for the two shares. State the formula you use in your calculation. Comment and compare your results with part 4d above and state which share is over-valued and under-valued. Note: provide final answer in 4 decimal placesSee Answer
Q15: Florence Johnston has been saving $700 semiannually in her retirement account for the last 40 years. At the end of this year,Florence will be ready to retire. Her retirement fund has earned 8%compounded semiannually. How much has Florence accumulated in her retirement account?See Answer
Q16: Q2a. Company Locklend Ltd has issued 18.5 years bond to raise capital. If the bond face value is 1000, the interest rate is 3.5% p.a. compounded semi-annually and the coupon rate is 4.5%p.a. Find the price of the bond using both PRICE and PV function. Comment on your results of the two functions. Q2b. Assume new information is given about yield and coupon rate. If yield reduces by 2%and all other information stay same as in part 2a, recalculate the price of the bond either using the PV or PRICE function. Instead of yield change suppose coupon rate reduces by 2%and all other information stay constant as in part 2a. Recalculate the price of the bond either using the PV or PRICE function. Comment on the results.See Answer
Q17: An investor invests 30% of her wealth in a risky asset with an expected rate of return of 0.15 and a varianceof 0.04 and 70% in a T-bill that pays 6%. Her portfolio's expected return and standard deviation areandrespectively. A. 0.114; 0.12 B. 0.087; 0.06 O C. 0.295; 0.06 D. 0.087; 0.12See Answer
Q18: Question 10: Which of the following statements about Gross Domestic Product (GDP) isNOT correct? (a) GDP is measured in dollars as at a certain date. It's a measure of wealth, akin to assetson the balance sheet. (b) GDP = C + I + G + X - M%3D (c) Consumption (C) includes Imports (M). Imports are subtracted from GDP to avoidcounting foreign production as domestic production. (d) X - M is called the trade surplus or net exports. (e) G is government spending on services such as police, nurses, soldiers and teachers. Itdoes not include transfer payments such as the pension.See Answer
Q19: Q1a. Assume you take a loan of $550,000. The loan is for 15 years and the annual interest rate offered by bank is 5.35%. If the cash repayment frequency is on monthly basis, using the worksheet "Amortisation" calculate the number of repayments, effective period rate and sizeof repayment on the loan amount. Q1b. Complete the loan amortisation table using worksheet Q1. At the end of the table calculate the principle repayment amount for period 160? Explain how the amortisation table works in loan repayment schedule.See Answer
Q20: Q5a. Calculate annual growth rates of dividends for ANZ (g ANZ) and for WOW (g wow) using \text { the formula }\left(g_{t}=\frac{D_{t}}{D_{t-1}}-1\right) and the average annual growth rate for ANZ and WOW. Note: provide final answer in 4 decimal places Q5b. Assume constant growth model holds. The effective annualized return of ANZ and wow are 11.70% and 3.89% respectively. Find the share price of ANZ and WOW at time 2020 if the average growth rate is expected to decline for ANZ but increase for WOW from time 2020 onward infinitely. Note: provide final answer in 4 decimal placesSee Answer

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