Your have just retired. You are considering the purchase of an investment annuity

from a life insurance company. The annuity costs $$250,000.$ It will pay $$15\mathrm{.}000$ per

year for the next $25$ years. Payments will be at the end of each year. You have

decided that you should only invest in this annuity if it has an annual compound rate

of return of $4\%.$ Should you purchase this annuity?

Yes because it is worth $$264,013$

No because it is worth $$234,331$

Yes because it is worth $$234,331$

No because it is worth $$264,013$

Question $2$

Which statement is true about bonds?

A bond amortizes the repayment of principal over the life of the bond.

The price of a bond changes as the coupon rate changes.

Par is the principal that is owed at maturity.

The yield to maturity is fixed for the life of the bond.

Question $3$

Assume that the risk free rate of return is currently $9\%$ and the market return is

currently $13\%.$ Using this data calculate the required return for an asset that has a

beta of $\mathrm{.}8.$

$12\mathrm{.}2\%$

$19\mathrm{.}3\%$

$4\mathrm{.}8\%$

$23\mathrm{.}7\%$