Final answer:
The expected return on Damian's annuity cannot be calculated without knowing his life expectancy or annuity terms. The buying power of Rosalie's retirement payment can be determined by calculating the present value with provided inflation rates. The actuarially fair premium for life insurance can only be computed using mortality rates for groups with and without a family history of cancer.
Step-by-step explanation:
The student's question about Damian's annuity involves calculating the expected return on the contract. To find this, you would multiply the monthly payment by the number of months Damian is expected to receive this payment. However, since life expectancy is not provided, and annuity payments are typically for life, we cannot calculate the exact expected return without additional information such as Damian's life expectancy or the terms of the annuity contract.
For Rosalie's question regarding the buying power of her one-time retirement payment, you would need to calculate the present value of $20,000 accounting for an annual inflation rate of 6% over 16 years. This involves using the formula for the present value of a lump sum: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the inflation rate, and n is the number of years.
The life insurance question requires calculating the actuarially fair premium for two distinct groups based on their mortality rates. The calculations would involve determining the expected payout for each group and then finding the premium that would equivalently cover the expected claims.