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8-3 A life insurance policy is a financial asset, with the premiums paid representing the investmentâs cost. a. How would you calculate the expected return on a 1-year life insurance policy? b. Suppose the owner of a life insurance policy has no other financial assetsâthe personâs only other asset is âhuman capital,â or earnings capacity. What is the correlation coeffi- cient between the return on the insurance policy and that on the human capital? c. Life insurance companies must pay administrative costs and sales representativesâ commissions, hence the expected rate of return on insurance premiums is generally low or even negative. Use portfolio concepts to explain why people buy life insurance in spite of low expected returns
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Ammonia, NH3, is a weak electrolyte. It forms ions in solution by reacting with water molecules to form the ammonium ion and hydroxide ion. Write the balanced chemical re...
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