The Johnsons Change Their Life Insurance Coverage Harry and Belinda Johnson spend $20 per month on life insurance in the form of a premium on a $10,000, paid-at-65 cash-value policy on Harry that his parents bought for him years ago. Belinda has a group term i-surance policy from her employer with a face amount of $200,000. By choosing a group life insurance plan from his menu of employee benefits, Harry now has $100,000 of group term life insurance. Harry and Belinda have decided that, because they have no children, they could reduce their life insurance needs by protecting one another's income for only four years, assuming the survivor would be able to fend for himself or herself after that time. They also realize that their savings fund is so low that it would have no bearing on their life insurance needs. Harry and Belinda are basing their calculations on a projected 4 percent rate of return after taxes and inflation. They also estimate the following expenses: $15,000 for final expenses, $20,000 for readjustment expenses,

and $5,000 for repayment of short-term debts.

Requirement:

(a) Should the $3,000 interest earnings from Harry's trust fund be included in his annual income for the purposes of calculating the likely dollar loss if he were to die? (See the discussions about the Johnsons in Chapter 1 beginning on page 34.) Explain your response.

(b) Based on your response to the previous question, how much more life insurance does Harry need? Use the Run the Numbers worksheet on page 366 to arrive at your answer.

(c) Repeat the calculations to arrive at the additional life insurance needed on Belinda's life.

(d) How might the Johnsons most economically meet any additional life insurance needs you have determined they may have?

e) In addition to their life insurance planning, how might the Johnsons begin to prepare for their retirement years?????ement years?

16 known liabilities. The result is that EME governments pay a premium to investors for the risk of their holding relatively illiquid securities. Not all these factors are outside control of the debt manager. The need for coordination between the different agencies involved has already been stressed. But the debt manager has a direct role through the design of the issuance plan, and of the primary market. Central to this is the issuance of benchmark securities: large lines of T-bonds at key tenors. The large size improves the potential for wider distribution of the security among different types of investors with different incentives to trade, thereby increasing trading opportunities; it reduces search cost for those who want to buy; and it makes it less likely that any one transaction will change the market price. All these characteristics reduce the liquidity premium demanded by the market. EME government issuers are increasingly adopting a benchmark issuance policy to build sufficiently large lines of T-bonds as a necessary first step to foster secondary market activity. That in turn usually requires the being able to issue successive tranches of the same bond; and it brings into relief the ability to deploy liability management operations (LMOs). LMOs, whether buybacks or bond exchanges, can be used to build up a liquid bond of the chosen tenor; and also manage the cash management challenges as the larger bonds comes to maturity (see below). Predictability and transparency are the other essential characteristics of the issuance plan. The plan should be published-typically as part of the ABP and published with other documents supporting the annual budget. Investors will in turn be able to plan their own portfolios; and intermediaries their marketing strategies. Once it is published the issuer should try and keep to the plan-otherwise the benefits of publishing it are vitiated. Plans sometimes have to be changed, not least if the government's borrowing requirement changes in the course of the year. But it should be done in a way that is predictable - in the sense of consistency with previous policies. Indeed, "predictability" should be interpreted as predictability of policy responses: markets do not like surprises and the debt manager's decisions should be anchored back to well-defined and transparent objectives. Some countries also indicate at the start of the year the direction of any changes that might be necessary during the year.(a) Explain the privity of contract rule. (b) What is vicarious performance and is vicarious performance an exception to the privity of contract rule? () Explain why an insurance contract is an exception to the privity of contract rule. 6. (a) Under what circumstances would "silence" be acceptance? vestion on a topwats page (b) Explain the term "counter-offer" and how it might arise. (e) Does a contract under seal require consideration? If not, why not?14. When comparing Pearson correlations of 0.8 and 0.9, it is actually better to compare a. 0.64 and 0.81 b. 8% and 9% C. (1 - B) and (1 - 9) d. 80 % and 90%% e. 0.B and 0,9 f. none of the above 15. Which among the alternatives below, best describes the x, y data in the graph. a. no correlation present b. weak negative correlation c. a nonlinear relationship d. a cloud of points e. a strong nonlinear relationship f. strong negative correlation g. strong positive correlation h. weak positive correlation I. none of the above 16. It's a good idea to construct a scatter plot before conducting Pearson correlation analysis because a, outliers may vitiate parametric correlation b. there's no point computing correlation if points fall on a straight line C. different methods are used for positive versus negative correlation d. one should only compute correlation if there's a clear curvilinear trend e. a person's visual impression about correlation overrides statistical analysis f. none of the above 17. A visualization that allows one to estimate the relationship between two x, y paired, numeric variables of any sample size, is a a. box plot b. histogram c. strip chant d, bar graph e. violin plot f. stem-and-leaf display g. none of the above 18. When testing Pearson r for significance, the null hypothesis is a. r is large b. r-square is 95% C. r is not zero d. r is invalid e. r is small f. r is zero g. r-square is 5% h. none of the above29. Comprehensive, correlation analysis is performed weekly on a biomedical x, y data set with a large sample size of N > 2c6 that increases weekly by Al input of data from on-line medical records and from sensor feeds of wearable devices, e.g., implants, smart watches, Pearson r remains significant, as performed weekly, yet the magnitude of Pearson r fluctuates greatly. And, graphical visualization of scatter plots is frustrating due to over-plotting of points which makes dense "ink" blobs across the graphs. The analysts decide to apply a lowess fit each week to the ever growing scatter plots. Statistically, why the lowess fit? 3, as EDA b. to detect nonlinear trends C. to guide the eye d. to detect clusters e. to detect x, y "features" f. to assess linearity g. to explore the x, y data h. all the above 30. Consider this code chunk entered at the R Console. The LAST LINE of R code below, returns 3 rl 12 plot (rl, r2) I scatter plot cor. test (rl, r2, conf. level=. 99) a. Pearson r with two-sided significance test and 99% Cl of r b. Pearson r with two-sided significance test and 95% Cl of r c. Spearman r with one-sided significance test d. Pearson r with one-sided significance test and 99% Cl of r e. Spearman r with two-sided significance test f. Pearson r with one-sided significance test and 95% Cl of r 4- none of the above 31. The x, y data encoded in R below, is suitable for correlation analysis. Which of the following is both statistically accurate and written in the best format for reporting in a research paper. > x