Reference no: EM132459354

Question 1: What is duration? Why is it important?

Question 2: During the 1999's The Financia Services Modernization Act of 1999 was enacted. What did this law do? What were some of the consequences for the US banking system?

Question 3: What are three key activity areas for securities firms?

Question 4: What is negative externality? In what ways do the existence of negative externalities justify the extra regulatory attention received by financial institutions?

Question 5: a. Suppose a 65-year-old person wants to purchase an annuity from an insurance company that would pay $20,000 per year until the end of that person's life. The insurance company expects this person to live for 15 more years and would be willing to pay 6 percent on the annuity. How much should the insurance company ask this person to pay for the annuity?

b. A second 65-year-old person wants the same $20,000 annuity, but this person is much healthier and is expected to live for 20 years. If the same 6 percent interest rate applies, how much should this healthier person be charged for the annuity?