1 a person age 40 purchases a life annuity that provides 1o, Ask an Expert

Finance

1. A person age 40 purchases a life annuity that provides 1o oo0 each year for life, witlh the first payment starting at age 41. The first 1o payments will be paid regardless of whether the annuitant is alive or not. Find a formula for the single premium.

2. REQUIRED RATE OF RETURN

Stock R has a beta of 1.4, Stock S has a beta of 0.6, the required return on an average stock is 10%, and the risk-free rate of return is 4%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places. %

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92712165

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