8.Suppose you sell a Treasury bond futures contract for a price of 98.5 percent of the face value of $100,000.Assume that the Treasury bond futures price rises to 99.5 percent.What is your loss or gain?

9.Suppose that the pension fund you are managing is expecting an inflow of funds of $10 million next year and you want to make sure that you will earn the current interest rate of 6% when you invest the incoming funds in long-term bonds.How would you use the futures market to do this?

10.Suppose a 65-year-old person wanted to purchase an annuity from an insurance company that would pay $125,000 until the end of that persons life.The insurance company expected that this person would live for 17 more years and it would be willing to pay 7 percent on the annuity.How much should the insurance company ask this person to pay for the annuity?

11.You deposit $7500 annually into a life insurance fund for the next 20 years, at which time you plan to retire.Instead of a lump sum, you wish to receive annuities for the next 20 years.What is the annual payment you expect to receive beginning in year 21 if you assume an interest rate of 7 percent for the whole time period?

12.Suppose the loss ratio on a line of property insurance is 76 percent, the expense is 25 percent, the dividend ratio is 2 percent, and the investment yield is 7 percent.How profitable is this line?

13.An insurance companys projected loss ratio is 80 percent, its loss adjustment expense ratio is 18 percent, and the dividend ratio is 3 percent.What is the minimum investment yield the company requires to earn a 4% profit?