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

An individual who purchases a life annuity is given protection against:

the risk of outliving their savings (longevity risk)

losses from stock market declines

fluctuations in interest rates

inflation eroding purchasing power

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Verified step by step guidance

Understand the concept of a life annuity: A life annuity is a financial product that provides regular payments to an individual for the rest of their life, typically purchased to ensure a steady income during retirement.

Identify the primary risk addressed by a life annuity: The main purpose of a life annuity is to protect against longevity risk, which is the risk of outliving one's savings or financial resources.

Analyze the other options provided in the problem: Losses from stock market declines, fluctuations in interest rates, and inflation eroding purchasing power are not directly addressed by a life annuity. These risks may require other financial strategies or products to mitigate.

Clarify why longevity risk is the correct answer: A life annuity guarantees payments for life, regardless of how long the individual lives, ensuring they do not run out of income even if they live longer than expected.

Conclude the reasoning: The correct answer is 'the risk of outliving their savings (longevity risk)' because this is the specific financial risk that life annuities are designed to mitigate.