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

Lisa has recently bought a fixed annuity. Which of the following best describes a fixed annuity as an investment?

It offers returns that fluctuate based on the performance of the stock market.

It is a type of equity security that represents ownership in a corporation.

It provides regular, guaranteed payments over a specified period or for life.

It allows the investor to withdraw the principal at any time without penalty.

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Verified step by step guidance

Understand the concept of a fixed annuity: A fixed annuity is a financial product offered by insurance companies that provides guaranteed payments to the investor over a specified period or for life. It is not tied to stock market performance and offers stability.

Eliminate incorrect options: Analyze each option provided in the problem and determine whether it aligns with the characteristics of a fixed annuity. For example, fixed annuities do not fluctuate based on stock market performance, so that option can be ruled out.

Focus on the correct description: A fixed annuity is designed to provide regular, guaranteed payments, which is its defining feature. This makes it a reliable investment for individuals seeking predictable income.

Clarify misconceptions: Fixed annuities are not equity securities, as they do not represent ownership in a corporation. Additionally, withdrawing the principal without penalty is not a feature of fixed annuities; they often have surrender charges for early withdrawal.

Conclude with the correct answer: Based on the analysis, the correct description of a fixed annuity is that it provides regular, guaranteed payments over a specified period or for life.