In: Finance
1.HPY is negative does not mean that ending value of
the investment is negative Select one:
True
False
2.Nominal Risk Free Rate investment is one which has one possible
return which has a probability of 1.0
True
False
3.Some types of life insurance policy payments contribute towards
increasing the amount of money you have for your retirement years
Select one:
True
False
Answer:
1. TRUE
The investment value can be zero or greater than that but it can
never be negative. A value less than 1 implies that there is a
decline in wealth, which indicates that you have got a negative
return. If an HPY is zero, it means that you have lost all your
money.
2. TRUE
The nominal risk-free rate is the rate of return as it is quoted.
It is not adjusted for the expected inflation. A riskfree
investment should have returns that are uncorrelated with risky
investments in a market.
3. TRUE
There are many life insurance policies in which you pay premiums
now and can redeem them when you get retired. Some policyholders
can get customized life insurance policies according to their
needs.