2
QuizMultiple Choice

Variable Investments — Quiz

Question 2 • Financial Math

Sofia invests in a fixed annuity that pays a set amount each month for 20 years. Is this a variable investment, and why or why not?

Answer
A
No, because it provides a fixed income.
B
Yes, because the returns can change.
C
Yes, because it does not guarantee principal.
D
No, because it is subject to market conditions.

Explanation

A fixed annuity pays a predetermined amount on a regular schedule, so its income does not vary with investment-market performance. Therefore, it is not a variable investment. Choice D is correct: it provides a fixed income.

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