9. An insurance company sells single premium?
9. An insurance company sells single premium contracts and deferred income related benefit a stock index, the time t value of a unit which is denoted by S (t). The contracts provide a guaranteed minimum return rate of 3%. When 0, a single premium amount P is paid by the policyholder, and P *% and is deducted by the insurance company. Thus, at maturity (one year) the insurance company will pay the policy: P * (1 – y%) * Max [S (t) / S (0), 1.03] You are given the following information: (i) Ignore any consideration of dividend payments. (ii) S (0) = 100. (iii) the price of one year European put option with strike price of $ 103, in the index stock is $ 15.21. Determine% and so the insurance company will not gain or lose money on this contract.
Do your own homework. Who need an employee who can not do its job??
single premium annuity, indexed annuities
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