1 a life insurance owes 50000 in 5 years to fund this, Ask an Expert

Finance

1. A life insurance owes $50,000 in 5 years. To fund this outflow the insurer wishes to buy strips (zero coupon securities) that mature in 5 years. The strip pay 7% effective annual returns (EAR). How much must the insurer spend now to fully fund the outflow?

2. Bank A offers you a loan at 9.61% compounded 5 times a year. Bank B offers to loan you the same amount at 0.10% less than the rate offered by Bank A but compounded twice as often as the Bank A rate is. Which bank's loan should you accept?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93040414

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