Assume That at Retirement You Have Accumulated $825,000 in a Variable

question 29

Multiple Choice

Assume that at retirement you have accumulated $825,000 in a variable annuity contract.The assumed investment return is 5.5% and your life expectancy is 18 years.What is the hypothetical constant benefit payment

• A)$73,358.93
• B)$33,333.33
• C)$51,481.38
• D)$52,452.73
• E)Cannot tell without additional information

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Definitions:

Risk-Neutral Investor

An individual who is indifferent to risk when making investment decisions, focusing solely on the expected returns.

Risk-Averse Investor

An investor who prefers lower risks, often accepting lower returns to avoid potential losses.

Risky Asset

A type of financial instrument or investment that carries a higher degree of risk, potentially leading to greater returns or significant losses.

Risk Free Asset

An investment with a guaranteed return and no risk of financial loss, typically government bonds.