1. Define an annuity and discuss why an annuity is so important when buying a car, buying a home or in a retirement plan, especially in the life of people that are not economically wealthy?
2. Calculate the expected rate of return (ER) for the following: Po= purchase price = $62 P1= expected selling price = $77 I = Income = $7 What is the percentage of Expected Return? Round the answer to two decimal places in percentage form.
3. The probability distribution of a less risky expected return is more peaked than that of a riskier return. What shape would the probability distribution be for (a) completely certain returns and (b) completely uncertain returns?