# One element in preparing a financial plan for a client is to determine the appropriate type and amount of life insurance. If a client is conservative, 30 years old, and married with 2 young children, whose income is unpredictable, the IA may recommend what type of life insurance policy?

Permanent Life Insurance Policy

Explanation:

Permanent Life Insurance Policy is a flexible insurance policy that allows policy holders to borrow from their insurance policy (policy loan). Furthermore, withdrawal up to the total premium amount paid into the policy is allowed.

## Related Questions

What is one of the main reasons why the need for effective communication on teams has been growing so much in the last few decades?

Different insights and opinions in a collaborative setting can open up new better methods

True or false. The primary functions of price in a free market are to inform, direct, and motivate consumers and firms.

True

Explanation:

Prices in a free market co-ordinate the buying and selling decisions in the market.  In their rationing role, prices inform the distribution of goods and other resources throughout the economy.  Prices motivate firms by acting as incentives that provide a standard of measure of value throughout the world. Prices direct producers and consumers, thereby acting as signals to educate producers and consumers on how to adjust their production and consumption decisions.

Maurer, inc.,has an odd dividend policy. The company has just paid a dividend of $2 per share and has announced that it will increase the dividend by$6 per share for each of the next five years, and then never pay another dividend. If yoy require a return of 10 percent on the company's stock, how much will you pay for a share today?

Price of stock = $44.05 Explanation: The price of a share can be calculated using the dividend valuation model According to this model the value of share is equal to the sum of the present values of its future cash dividends discounted at the required rate of return. To determine the price of the stock to , we calculate the present value for each of the dividend payable for the next five years and then sum them. The formula below would help PV = G× (1+r)^(-n) PV = Present Value, r required rate of return - 10%, n- the year, G- dividend payable in a particular year Year PV of dividend 1 2+6 ×× 1.1^-1 = 7.27 2 10 × 1.1^-2 = 8.26 3 12× 1.1^-3 = 9.02 4 14 × 1.1^-4 =9.56 5 16 × 1.1^-5 = 9.93 Total Present Value of dividend = 7.27+ 8.26 +9.02 +9.56 +9.93 = 44.05 Price of stock =$44.05

Maurer, inc.,has an odd dividend policy. The company has just paid a dividend of $2 per share and has announced that it will increase the dividend by$6 per share for each of the next five years, and then never pay another dividend. If yoy require a return of 10 percent on the company's stock, how much will you pay for a share today?

Price of stock = $44.05 Explanation: The price of a share can be calculated using the dividend valuation model According to this model the value of share is equal to the sum of the present values of its future cash dividends discounted at the required rate of return. To determine the price of the stock to , we calculate the present value for each of the dividend payable for the next five years and then sum them. The formula below would help PV = G× (1+r)^(-n) PV = Present Value, r required rate of return - 10%, n- the year, G- dividend payable in a particular year Year PV of dividend 1 2+6 ×× 1.1^-1 = 7.27 2 10 × 1.1^-2 = 8.26 3 12× 1.1^-3 = 9.02 4 14 × 1.1^-4 =9.56 5 16 × 1.1^-5 = 9.93 Total Present Value of dividend = 7.27+ 8.26 +9.02 +9.56 +9.93 = 44.05 Price of stock =$44.05