Investment VehiclesQuestion 85 of 100
A fixed annuity is characterized by:
a.Investment risk borne entirely by the contract holder
b.Values tied to equity subaccounts
c.A guaranteed minimum interest rate and fixed payments backed by the insurer
d.FDIC insurance
Explanation
A fixed annuity provides a guaranteed minimum interest rate and fixed payments, with the insurer bearing the investment risk from its general account. Because there is no investment risk to the holder, a fixed annuity is generally an insurance product, not a security. Its guarantees depend on the insurer's claims-paying ability.
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