Allright Insurance Has Total Assets of $140 Million Consisting of $50

question 43

Multiple Choice

Allright Insurance has total assets of $140 million consisting of $50 million in 2-year,6 percent Treasury notes and $90 million in 10-year,7.2 percent fixed-rate Baa bonds.These assets are funded by $100 million 5-year,5 percent fixed rate GICs and equity.

Market interest rates are expected to increase 1 percent to 11 percent in the next year.If this occurs,what will be the effect on the market value of equity of Allright?

• A)-$801,818.
• B)-$2,430,909.
• C)-$6,529,091.
• D)+$2,430,909.

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Definitions:

Alfred Adler

A psychologist who contributed to the development of psychotherapy and originated theories on inferiority complex.

Carl Jung

A Swiss psychiatrist and psychoanalyst who founded analytical psychology and contributed significantly to the understanding of the psyche, dream analysis, and personality types.

Archetypes

Unconscious psychic structures shared by all people.

Defense Mechanisms

Psychological strategies used by individuals to cope with reality and to maintain a positive self-image.