Products & RisksPregunta 25 de 125
A fixed annuity exposes the contract holder primarily to which risk?
a.Purchasing power (inflation) risk, because payments are fixed in dollar terms
b.Market risk from equity subaccounts
c.Currency exchange risk
d.Liquidity risk equivalent to owning common stock
Explicación
A fixed annuity guarantees a set payment, so its main drawback is purchasing power risk: over time inflation erodes the real value of level payments. Variable annuities aim to counter inflation risk by investing in securities, but they introduce market risk instead.
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