Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

When a contract owner terminates an annuity before its maturity date, which of the following typically occurs?

The annuity contract is converted into a life insurance policy at no additional cost.

The owner may receive the surrender value, which could be less than the total premiums paid due to surrender charges and possible tax penalties.

The owner automatically receives the full value of all future annuity payments without any deductions.

The owner is required to continue making premium payments until the original maturity date.

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Verified step by step guidance

Understand the concept of an annuity: An annuity is a financial product that provides a series of payments to the owner, typically after retirement, in exchange for premiums paid over time.

Recognize what happens when an annuity is terminated before maturity: Early termination of an annuity often involves surrender charges and potential tax penalties, which can reduce the amount the owner receives.

Identify the surrender value: The surrender value is the amount the owner receives upon termination, which is typically less than the total premiums paid due to deductions like surrender charges.

Clarify why the other options are incorrect: An annuity contract is not converted into a life insurance policy at no cost, nor does the owner automatically receive the full value of future payments without deductions. Additionally, the owner is not required to continue making payments after termination.

Conclude that the correct answer is: The owner may receive the surrender value, which could be less than the total premiums paid due to surrender charges and possible tax penalties.