Question

The "Needs Analysis Method" of determining how much life insurance to buy, which can also be used in determining the amount of disability coverage, consists of

a.dividing your annual income by a market interest rate.

b.multiplying your annual income by a fixed factor.

c.dividing your total wealth by a market interest rate.

d.determining your household's continuing economic expenses minus your household's existing financial resources if the adverse event occurs.

e.determining how much inheritance is appropriate for your children.

As opposed to broker markets, dealers typically _____________ within ____________.

a.arrange for sales between buyers and sellers; over the counter markets.

b.arrange for sales between buyers and sellers; exchanges.

c.conduct sales between themselves and others; over the counter markets

d.conduct sales between themselves and others; exchanges

e.work with the FDIC; their customer deposits

Answer 1

1) Solution: multiplying your annual income by a fixed factor

Explanation: The "Needs Analysis Method" refers to an approach of computing the amount of life insurance coverage required by considering an individual's available financial resources and financial obligations in addition to life insurance. The fixed factor needs to be multiplied with the income over several years to ensure that in an adverse event the other family members are covered.

　

2) Solution: conduct sales between themselves and others; over the counter markets

Explanation: In contrary to broker markets, dealers deal with each other and apply their own funds in closure of the transaction. In over the counter markets dealers perform the role of market-makers by quoting prices at which they will sell and buy a currency, security, or other financial products