Which of the Following Statements About Annuity Contracts Is True

question 38

Multiple Choice

Which of the following statements about annuity contracts is true?

• A)Annuity contracts provide a fixed income stream from the premiums paid.
• B)Payments received from an annuity contract are tax-exempt.
• C)Payments received from an annuity contract are fully taxable as ordinary income.
• D)Payments received from an annuity contract are fully taxable as capital gain.

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Definitions:

Labor

The effort involving both bodily and intellectual activities applied in generating goods and services.

AVC

Average Variable Cost, the total variable cost divided by the quantity of output produced.

AFC

Average fixed cost, or the total fixed costs divided by the quantity of output produced, indicating how fixed costs per unit change with production levels.

MC

The additional cost incurred for producing one more unit of a good or service; it's synonymous with marginal cost.