Your Insurance Agent Is Trying to Sell You an Annuity

question 131

Multiple Choice

Your insurance agent is trying to sell you an annuity that costs $100,000 today. By buying this annuity, your agent promises that you will receive payments of $384.40 a month for the next 40
Years. What is the rate of return on this investment?

• A) 3.45%
• B) 3.47%
• C) 3.50%
• D) 3.52%
• E) 3.55%

---

Definitions:

Market Prices

The amounts at which goods and services can be bought or sold in open markets.

Resource Substitutability

The degree to which different inputs (or resources) can be substituted for one another in the production process.

Economic Resource

Any good or service that can be used to produce other goods and services, including labor, land, capital, and entrepreneurship.

Factory Workers

Individuals employed in industrial production settings, operating machinery or assembling goods.