Which of the following individuals is most likely to purchase a ...

[maegan_martin]

Which of the following individuals is most likely to purchase a life insurance policy that pays out an annual income beginning at a certain age until the individual's death?
 
  A) Alma, who expects to live a long life, based on her family history
  B) Avril, a tax attorney who wants to avoid adverse selection
  C) Bradley who has six young children
  D) Ian, who expects to have a short life expectancy because of an illness

Question 2

What is a fixed exchange rate and how is its value fixed?
 
  What will be an ideal response?

[whitcassie]

Answer to Question 1

A

Answer to Question 2

A fixed exchange rate policy is an exchange rate that is pegged at a value decided by the government or central bank. The central bank directly intervenes in the foreign exchange market to block the unregulated forces of supply and demand from changing the exchange rate away from its pegged value. For instance, if a central bank wanted to hold the exchange rate steady in the presence of diminished demand for its currency, the central bank props up demand by buying its currency in the foreign exchange market to keep the exchange rate from falling. If the demand for its currency increases, the central bank increases the supply by selling its currency and keeps the exchange rate from rising.