A Bank Is Considering Adding Life Insurance Underwriting to the Services

question 22

Multiple Choice

A bank is considering adding life insurance underwriting to the services it offers.It has estimated that the expected return and standard deviation of its traditional services are 12 percent and 6 percent respectively.It has also estimated that the expected return and standard deviation of its new underwriting services are 18 percent and 10 percent respectively.The correlation between these services has been estimated to be +0.10 and the bank estimates that 90 percent of its business will be from traditional services and 10 percent from the new underwriting services.What is the expected return of the new combination of services?

• A)17.40 percent
• B)12.60 percent
• C)5.59 percent
• D)15.00 percent
• E)None of the options is correct.

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Definitions:

Blood Pressure

The pressure of circulating blood on the walls of blood vessels, a vital sign indicating the health of the cardiovascular system.

Radial Pulse

The pulse felt at the wrist, on the lateral side where the radial artery runs. It is commonly used to measure heart rate.

Pulse Count

The act of measuring the number of heartbeats per minute as a means of assessing heart health.

Irregular

Deviating from the norm or standard, often used to describe something that is not consistent in pattern, arrangement, or frequency.