An indexed annuity has a 0% floor and a 6% cap. If the linked index returns negative 12% in a contract year, what interest is credited to the owner's account that year?

Explanation

The floor prevents loss in a down year. With a 0% floor, the worst that can happen is that no interest is credited; the owner's principal is not reduced because of the index decline. The cap would only matter in an up year, limiting an above-cap gain.