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On the Valuation of Property held for Life and in Reversion; and on the due Apportionment of it, when so held on the same Life, between the Tenant for Life and the Remainder-man
Published online by Cambridge University Press: 18 August 2016
Extract
In a paper published some time back in the Journal of the Institute, an endeavour was made to show the true principles upon which the value of securities depending on an isolated human life should be determined. Discarding the methods once so generally practised, and in accordance with which such securities were confounded with those depending on the average duration of many lives, it was urged that they should be regarded in a distinct point of view, and as affording the means of investments to be made not subject to any contingency whatever, but as securing to the holder a given rate of interest so long as he retains them, and the return of the capital invested when such interest shall cease to be paid or to accrue.
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- Copyright © Institute and Faculty of Actuaries 1855
References
page 61 note * See article “ On the contrivances required to render contingent reversionary interests marketable securities” (vol. ii., p. 159); also papers on the same subject by Robert Tucker, Esq. (vol. v., pp. 162 and 239 )
page 63 note * When a reversion is valued as if it were the single premium for an assurance, and no provision made for interest during the life of the tenant, the rate of interest should evidently be higher than when the reverse is the case; in other words, a security upon which interest is immediately payable cannot be expected to yield to a purchaser so high a rate as one where it is altogether deferred: accordingly, d is here taken at 5 per cent. But in the foregoing example V is calculated at 6, for the reason here given.