Questions from Financial Markets

Q: A client needs assistance with retirement planning. Here are the facts

A client needs assistance with retirement planning. Here are the facts: • The client Dave is 21 years old. He wants to retire at 65. • Dave has disposable income of $2,000/month. • The IRA Dave has ch...

Q: When opening an IRA account, investors have two options. With

When opening an IRA account, investors have two options. With a regular IRA account, funds added are not taxed initially, but are taxed when withdrawn. With a Roth IRA, the funds are taxed initially,...

Q: Your rich uncle dies, leaving you a life insurance policy worth

Your rich uncle dies, leaving you a life insurance policy worth $100,000. The insurance company also offers you an option to receive $8,225 per year for 20 years, with the first payment due today. Whi...

Q: Kio Outfitters estimated the losses and probabilities from past experience in the

Kio Outfitters estimated the losses and probabilities from past experience in the table in the next column. What is the probability Kio will experience a loss of $5,000 or greater? If an insurance com...

Q: A home products manufacturer estimates that the probability of being sued for

A home products manufacturer estimates that the probability of being sued for product defects is 1% per year per product manufactured. If the firm currently manufactures 20 products, what is the proba...

Q: An employee contributes $200 a year (at the end of

An employee contributes $200 a year (at the end of the year) to her pension plan. What would be the total contributions and value of the account after 5 years? Assume that the plan earns 15% per year...

Q: Paul’s car slid off the icy road, causing $2,

Paul’s car slid off the icy road, causing $2,500 in damage to his car. He was also treated for minor injuries, costing $1,300. His car insurance has a $500 deductible, after which the full loss is pai...

Q: Research indicates that the 1,000,000 cars in your

Research indicates that the 1,000,000 cars in your city experience unrecoverable losses of $250,000,000 per year from theft, collisions, and so on. If 30% of premiums are used to cover expenses, what...

Q: Assume that life expectancy in the United States is normally distributed with

Assume that life expectancy in the United States is normally distributed with a mean of 73 years and a standard deviation of 9 years. What is the probability that you will live to be over 100 years ol...

Q: An economist has estimated that, near the point of equilibrium,

An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for bonds can be estimated using the following equations:
a. What is the expected equilibrium pric...