1. Josephine, an aspiring architect, made purchase of an intriguing life insurance policy. The policy states that a minimum interest rate is guaranteed on the cash value, but additional interest may be credited based on the investment performance of a group of common stocks. It also contains a cap on the additional interest credited to the policy. Based on this information, what type of life insurance did Josephine purchase?
1. variable life insurance
2. indexed universal life insurance
3. current assumption whole life insurance
4. variable universal life insurance
2. There are two stocks you are considering to buy. Stock A and Stock B. Stock A has a beta of 1.4 and Stock B has a beta of 3.6. Treasury bills have a return rate of 7% and the market portfolio has an expected return of 11%. Compared to the less risky stock, the riskier stock has
A) 8.4% higher return
B) 8.3% higher return
C) 8.8 higher return
D) 8.8% lower return
E) 8.3 Lower return