A Life Insurance Firm Wants to Minimise Its Interest Rate

question 59

Multiple Choice

A life insurance firm wants to minimise its interest rate risk and it is planning on paying out $250 000 in five years. Which one of the following investments best matches its goal?

• A)High yield utility shares
• B)5-year zero coupon bonds
• C)10-year coupon bonds
• D)Money market investments rolled over as needed

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Definitions:

Anorexia Nervosa

A psychological and potentially life-threatening eating disorder characterized by an intense fear of gaining weight and a distorted body image, leading to severe restrictions on food intake and energy use.

Axis 1 Disorders

Clinical disorders that include major mental disorders, learning disorders, and substance use conditions in the DSM-IV classification.

Oral Stage

The first stage in Freud's psychosexual development theory, occurring in the first year of life, where pleasure is centered on oral activities such as sucking and eating.

Fixated

Obsessively focused or attached to someone or something in an immature psychological state.