Multiple Choice
What is the primary purpose of a sinking fund in relation to investments in securities?
20
views
7. Receivables and Investments
Introduction to Investments in Securities
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Who assumes the investment risk with a fixed annuity contract?
A
The federal government
B
The insurance company
C
The investment advisor
D
The annuity holder
Verified step by step guidance1
Understand the concept of a fixed annuity contract: A fixed annuity is a type of insurance product where the insurance company guarantees a fixed rate of return on the investment and provides regular payments to the annuity holder.
Identify the key parties involved: In a fixed annuity contract, the main parties are the insurance company (issuer), the annuity holder (investor), and potentially an investment advisor.
Clarify the investment risk: In a fixed annuity, the insurance company assumes the investment risk because it guarantees the fixed rate of return regardless of market performance.
Compare with other types of annuities: Unlike variable annuities, where the annuity holder bears the investment risk, fixed annuities shift this risk to the insurance company.
Conclude based on the explanation: The correct answer is 'The insurance company,' as it is responsible for ensuring the fixed returns promised in the contract.
6:41mWatch next
Master Introduction to Cost Method Investments with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Introduction to Investments in Securities practice set
Problem sets built by lead tutorsExpert video explanations