Which of the Following Individuals Is Most Likely to Purchase

question 124

Multiple Choice

Which of the following individuals is most likely to purchase a life insurance policy that pays out an annual income beginning at a certain age until the individual's death?

• A)Ian, who expects to have a short life expectancy because of an illness
• B)Bradley who has six young children
• C)Avril, a tax attorney who wants to avoid adverse selection
• D)Alma, who expects to live a long life, based on her family history

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Definitions:

Trade Acceptance

A written promise or a draft by one party, the seller, to another, the buyer, to pay a specified sum of money at a future date.

Sight Draft

A financial instrument that is payable on demand when presented to the drawee.

Net Present Value

is a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Credit Sale

A transaction where the buyer is allowed to pay for goods or services at a later date, as opposed to paying at the time of sale.