Which of the Following Statements Is (Are)true with Regard to an Annuity

question 22

Multiple Choice

Which of the following statements is (are) true with regard to an annuity payout option that includes a cost-of-living adjustment?
I.The initial monthly payment is lower than the initial payment a fixed annuity would have provided if purchased at the same age.
II.Periodic payments to the annuitant are adjusted for inflation.

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II

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Definitions:

Yield To Maturity

The total return anticipated on a bond if it is held until the date of its maturity, including all interest and principal repayments.

Semi-Annually

Occurring or calculated twice a year, often used in the context of interest payments or other financial assessments.

Face Value

The nominal or stated value of a bond, share of stock, or other financial instruments, typically used as a reference for calculating interest, dividends, or premiums.

Coupon Bond

A debt security that pays the holder a fixed interest rate (coupon) over the bond's life, with the principal amount repaid at maturity.