MISCELLANEOUS EXERCISE - 2 -Choose the correct alternative.
1. “A contract that pledges payment of an agreed upon amount to the person (or his/her nominee) on the happening of an event covered against” is technically known as
a. Death coverage b. Savings for future c. Life insurance d. Provident fund
2. Insurance companies collect a fixed amount from their customers at a fixed interval of time. This amount is called
a. EMI b. Installment c. Contribution d. Premium
3. Following are different types of insurance.
I. Life insurance
II. Health insurance
III. Liability insurance
(a) Only I (b) Only II (c) Only III (d) All the three
4. By taking insurance, an individual
a. Reduces the risk of an accident b. Reduces the cost of an accident
c. Transfers the risk to someone else. d. Converts the possibility of large loss to certainty of a small one.
5. You get payments of Rs.8,000 at the beginning of each year for five years at 6%, what is the value of this annuity?
a. Rs 34,720 b. Rs 39,320 c. Rs 35,720 d. Rs. 40,000
6. In an ordinary annuity, payments or receipts occur at
a. Beginning of each period b. End of each period c. Mid of each period d. Quarterly basis
7. Amount of money today which is equal to series of payments in future is called
a. Normal value of annuity b. Sinking value of annuity c. Present value of annuity d. Future value of annuity
8. Rental payment for an apartment is an example of
a. Annuity due b. Perpetuity c. Ordinary annuity d. Installment
9. ______ is a series of constant cashflows over a limited period of time.
a. Perpetuity b. Annuity c. Present value d. Future value
10. A retirement annuity is particularly attractive to someone who has
a. A severe illness b. Risk of low longevity c. Large family d. Chance of high longevity