Answer:
Total sum at te end of 6 years=$ 73,138.97
Explanation:
<em>The total sum in Lee's account at the end of year would be determined as follows:</em>
FV= A × (1+r)^n
FV- Future sum?,
A- deposit amount ,
r- interest rate - 9%/2 = 4.5% per 6 months
n- number of years is 6
First deposit for 6 years
FV = 15,000× 1.045^(2×6)
= $25,438.22
Last 40,000 for 2 years
FV = 40,000 1.045^(2×2)
=47,700.74403
Total sum at the end of 6 years
= $25,438.22 + $47,700.74
=$ 73,138.97
Answer:
b. In an ordinary annuity payments occur at the end of the period
Explanation:
<u>Why the other options are false:</u>
A.- On annuity due, the payment occurs at the beginning of the period.
B.- The perpetuity will not mature. It will yield interest for an indefinite period of time
C.- The present present value of a perpetuity is calculate as follow:
cash inflow/ interest rate = perpetuity
On an ordinary annuity, the payment occur at the end of the period, which is correct.
Answer:
$37.79
Explanation:
The computation of the stock price is shown below:
Data given in the question
Next year dividend = $3.25
Growth rate = 3.5%
Required rate of return = 12.1%
So, the stock price is
= Next year dividend ÷ (Required rate of return - growth rate)
= $3.25 ÷ (12.1% - 3.5%)
= $3.25 ÷ 8.6%
= $37.79
We simply apply the above formula to find out the stock price
Answer:
1. The difference between : Moral Hazard
<u>Intentions </u> - An individual is aware of what he is doing and intentionally goes for the risk because he knows he is covered and will gain as the payment or any related cost to sustaining an injury or a loss will not be paid by him but will be paid for by the insurance as it covered. Actions are intentional and potential risks increases as the behavior becomes irresponsible and careless.
Morale Hazard
<u>Intentions </u> - An individual's behavior unintentionally changes and so does the attitude toward the insured item changes. Here an individual losses responsibility unintentionally and unconsciously acts reckless as they know know it is insured.
main difference are intentions
Moral Hazard is an important concept to insurance companies because Insurance companies need to know the intentions of the person, insurance is not for gain but for cover against the possibility of a risk and the person insured should not seek for the risk and actually drive the risk or be the cause of the risk occurring.
2. No, I do not think it should be eliminate. it is obvious that moral hazard does in a way seem like it is encouraging bad behavior but risks must be insured. The insurance companies should enforce some claim charges for this kind of insurance.
Explanation:
4) Trade-off
5) it might be "Their resources are limited"
