Dora Dirg, treasurer for U$.$S based bright Life Insurance, has just joined the board of charitable organization that has a large endowment portfolio. She is researching how the investment policy for an endowment differs from that of life insurance companies and thus far reached the following conclusions:

$1.$ Both endowments and life insurance companies have aggressive return requirement

$2.$ Endowments are less willing to assume risk than life insurance companies because of donor concerns about volatility and loss or principal

$3.$ Endowments are less able to assume risk than life insurance companies because of expectations that endowments should provide stable funding for charitable operations.

$4.$ Endowment have lower liquidity requirement than life insurance companies because endowment spending needs are mer through a combination of current income and capital appreciation

$5.$ Both endowment and life insurance companies are subject to stringent legal and regulatory oversight.

$6.$ Investing in a tax $$aware manner is critical for both endowments and life insurance companies

B$.$ Which of the following statements is most correct regarding comment $2?$

A$.$ The comment is accurate because an endowment would have trouble attracting future donations if they lost a significant part of previous donated funds.

B$.$ The comment is accurate because although an endowment has a low willingness to take risk, it is not as low as for life insurance companies, which must ensure that all times they are able to pay the promised benefits to policyholders.

C$.$ The comment is inaccurate since life insurance companies have a lower willingness to take risk because confidence in their ability to pay their obligations as they fall due is a crucial element in the industry$$s financial viability. Endowments, by contrast, have a greater willingness to take risk because short$-$term portfolio volatility is unlikely to impact their ability to support the endowed institution on a long$-$term basis.

C$.$ Which of the following statements is most correct regarding comment $3?$

A$.$ The comment is inaccurate because life insurance companies are generally constrained from taking high risk by regulation. In contrast, the very long time horizons faced by endowments enable them to accept higher volatility in the short term in order to maximize tong$-$term total returns.

B$.$ The comment is accurate because many endowed institutions rely on their endowment to provide them with a major segment of their operating budgets.

V$.$ The comment is inaccurate since both life insurance companies endowments have a low ability to assume risk because they need to ensure the funding of their abilities to policyholders and charitable institutions respectively.

D$.$ Which of the following statements is most correct regarding comment $4?$

A$.$ The comment is inaccurate since both life insurance companies and endowments have fairly high liquidity requirement because they need to make regular distributions to policy holders and charitable institutions respectively.

B$.$ The comment is accurate because the distributions made by endowments are foreseeable and usually constitute a small percentage of the portfolio$$s total assets. In contrast, life insurance products are promise to pay money on certain expected or unexpected events.

C$.$ The comment is inaccurate since life insurance companies also have low liquidity requirements because they can use new premium income together with current portfolio income to meet claims as they fall due

Are comment $5$ and $6$ correct or incorrect?

Comment $5$ Comment $6$

A$.$ Correct Incorrect

B$.$ Incorrect Correct

C$.$ Incorrect Incorrect