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Question 3 Not yet answered Marked out of 20.00 Flag question A. Matlifer is a big stock life insurer that sells long-term health insurance plans and annuities. The following questions ask you about the traditional business Matlifer was doing in the 1980s. Interest rates fluctuate between 10% and 20%. Matlifer invests all collected premium and their capital at the 10-year Treasury and corporate bonds. (a) What are the major risks that Matlifer is exposed to? (2%) (b) Suppose most of Matlifer's customers buy both life insurance and annuity insurance from the insurer. Is this desirable for Matlifer or not? Why? Explain in no more than 4 sentences. (2%) (c) What benefits can people get from annuities compared to saving on their own? (2%) (d) What is mainly on the asset side of Matlifer's balance sheet? What is mainly on the liability side of Matlifer's balance sheet? (2%) (e) Policyholders of insurance policies and annuity policies can surrender their plans subject to a surrender charge. Do Matlifer's assets increase or decrease when policyholders surrender their plans? Do Matlifer's liabilities increase or decrease when 10 X You are screen sharing Stop Share MAY w i DOLL at Question 3 Not yet answered Marked out of 20.00 Flag question A. Matlifer is a big stock life insurer that sells long-term health insurance plans and annuities. The following questions ask you about the traditional business Matlifer was doing in the 1980s. Interest rates fluctuate between 10% and 20%. Matlifer invests all collected premium and their capital at the 10-year Treasury and corporate bonds. (a) What are the major risks that Matlifer is exposed to? (2%) (b) Suppose most of Matlifer's customers buy both life insurance and annuity insurance from the insurer. Is this desirable for Matlifer or not? Why? Explain in no more than 4 sentences. (2%) (c) What benefits can people get from annuities compared to saving on their own? (2%) (d) What is mainly on the asset side of Matlifer's balance sheet? What is mainly on the liability side of Matlifer's balance sheet? (2%) (e) Policyholders of insurance policies and annuity policies can surrender their plans subject to a surrender charge. Do Matlifer's assets increase or decrease when policyholders surrender their plans? Do Matlifer's liabilities increase or decrease when 10 X You are screen sharing Stop Share MAY w i DOLL at

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