Carl Is Concerned That If He Purchases a Fixed Indexed

question 7

Multiple Choice

Carl is concerned that if he purchases a fixed indexed annuity,he will lose money long-term if the stock index declines.Which equity indexed annuity provision assures Carl that he will not lose money if he holds the equity indexed annuity to term?

• A)the indexing method
• B)the participation rate
• C)the guaranteed minimum value
• D)the maximum rate cap

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Definitions:

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified timeframe.

In-The-Money

A term used in options trading to describe an option that has intrinsic value, where the strike price is favorable compared to the current market price of the underlying asset.

Stock Price

The current price at which a share of a company is being bought or sold in the stock market.

Exercise Price

The price at which the holder of an option can buy (in the case of a call) or sell (in the case of a put) the underlying security or commodity.