Long Term Insurance Company offers a 50-year annuity. The annuity pays $1,000/year at the end...
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Long Term Insurance Company offers a 50-year annuity. The annuity pays $1,000/year at the end of each year and carries a market rate of 4%. How much would you pay today for such an annuity?
You won the New York Get Rich Lottery, and you must decide if A) You take the lump sum of $25 million now or B) a payment of $2,000,000 per year for 20 years. If you can earn only 3% per year, which option is better? If you can earn 6% per year, which option is better?
If the Federal Reserve Bank of the US decreases the supply of money in the economy, what must happen to interest rates, everything else equal? To decrease the supply of money would the Fed BUY or SELL securities from or to the major banks?
I would like all three questions answered. Thank you!
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