Chapter 3 - Chapter 3 Conceptual Problems 2. Advantages of...

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Chapter 3 Conceptual Problems 2. Advantages of using an informal arrangement rather than a formal financial sector would be that in an informal arrangement, the consumer might have an easier time of negotiating the terms of whatever they needed. If the consumer wanted a home mortgage loan, they could negotiate the interest rate and terms of payment easier than in a formal setting where all of this is standardized and there is little room for negotiation by anyone other than that financial institution. 4. What would happen to the purchase price of the annuity as the age of the purchaser goes up lessens with each year the purchaser is alive since they are receiving monthly payments and each payment they get is giving them some of the money they put into the annuity back to them. If the size of the monthly payment rises, the purchase amount will lessen at a greater rate than before. If ht health of the purchaser improves, they will more than likely live longer and therefore the purchase price would go down each month that they are still alive. 6.
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This note was uploaded on 10/31/2010 for the course ECON 2310 taught by Professor Williams during the Spring '10 term at Western New Mexico.

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Chapter 3 - Chapter 3 Conceptual Problems 2. Advantages of...

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