Suppose a new medicine has been invented that immunizes people from getting cancer. How should this...

Suppose a new medicine has been invented that immunizes people from getting cancer. How should this influence the investment policy (in regard to the duration) of the bond portfolio managers of life insurance companies? Explain.

Solutions

Expert Solution

If a new medicine has been invented that immunizations people from getting cancer it is a positive for all the insurance company because people will still be buying out on its insurances and people will not fall sick because of the immunization medicine.

It can be adverse for the company also because there will be reduction in the total volume of the company because of more people will not be buying out insurancesinsurances because they think that they are hedged to the most lethal disease

This will lead to the bond portfolio managers of the company to increase the duration for the longer time because sach investment in company is safe because of increase in the overall profit of a company because of this new technique.

On contrast bond yield also may go down a bit because people also discount the decrease in its value due to invention of this new medicine which provides with immunization.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Suppose a company has invented and patented a new drug to reduce the flu symptoms. The...

Suppose a company has invented and patented a new drug to reduce the flu symptoms. The marginal cost of producing the drug is constant: MC = $3. Sup??pose this drug is not covered by any insurance plan and the market demand is as follows: What is the equilibrium quantity? ?d =60−4? a) How much should the firm charge per unit to maximise its profit? b) Suppose the drug is now covered by a government insurance plan with a co-insurance rate...

Your partner is dying from a rare disease. Luckily a cure has recently been invented, by...

Your partner is dying from a rare disease. Luckily a cure has recently been invented, by one druggist who lives fairly close to you. This druggist is selling the cure for ten times the amount it cost him to make it. You try to raise the money but even borrowing from friends to family and taking a loan from the bank, you can only raise half of the amount. You go to the druggist and offer to pay half now...

suppose new driverless car technology invented, and that this new technology increases productivity in the short...

suppose new driverless car technology invented, and that this new technology increases productivity in the short run. use the AD/AS model to explain the impact of the new technology on the Canadian technology on short run. explain how price level, employment and GDP WILL change in the short ru

Suppose you invented a drug that blocked the production of LH from the anterior pituitary. 1. How...

Suppose you invented a drug that blocked the production of LH from the anterior pituitary. 1. How would this affect the menstrual cycle? 2. Would this drug be a good method for birth control? Why?

A new, simple test has been developed to detect a particular type of cancer. The test...

A new, simple test has been developed to detect a particular type of cancer. The test must be evaluated before it is put into use. A medical researcher selects a random sample of 1,000 adults and finds (by other means) that 3% have this type of cancer. Each of the 1,000 adults is given the test, and it is found that the test indicates cancer in 97% of those who have it and in 2% of those who do not....

How is behavioral medicine informed by epidemiology and how is behavioral medicine different from the field...

How is behavioral medicine informed by epidemiology and how is behavioral medicine different from the field of epidemiology?

How has Google been effective in getting and maintaining monopoly power as a search engine? Is...

How has Google been effective in getting and maintaining monopoly power as a search engine? Is this sustainable?

It appears that not all people are equally vulnerable to cancer. People from some ethnic groups...

It appears that not all people are equally vulnerable to cancer. People from some ethnic groups have higher or lower than average chances of developing certain types of cancer. Jennifer’s manager Dr. Steinberg thinks that the company’s insurance policy should reflect this fact and constantly raises this question in the meetings. To be more convincing, he asked Jennifer Nguyen to take a random sample of those Healthy Life clients who belong to ethnic group X (at least on their maternal...

A metallurgist has invented a new tungsten alloy for use in the filaments of light bulbs...

A metallurgist has invented a new tungsten alloy for use in the filaments of light bulbs that is supposed to burn brighter with the use of less energy. A company investigates the potential costs of producing the new type of bulb and decides that production would be economically feasible if the bulbs would last an average of longer than 2000 hours in continuous usage. Twenty-five of the new bulbs are tested and found to last an average of 2240 hours...

You are the international manager of a US business that has just invented a revolutionary new...

You are the international manager of a US business that has just invented a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture. Several patents protect the unique design of this computer. Your CEO has asked you to formulate a recommendation for how to expand into Western Europe. Your options are (a) to export from the US, (b) to license a European firm to manufacture and market the...

Subjects