Question

A variable annuity is a(n)


A. exempt security under the Securities Act of 1933
B. non-exempt security under the Securities Act of 1933 because the purchaser bears the investment risk
C. non-exempt security under the Securities Act of 1933 because the issuer bears the investment risk
D. insurance product that is not defined as a security, and thus is not subject to securities regulations

Answer 1

Answer:

The correct answer is B. non-exempt security under the Securities Act of 1933 because the purchaser bears the investment risk

Explanation:

With a variable annuity, the annuity funds are invested in securities such as bond funds or equity funds. In these cases, the performance of the funds will define the performance of the annuity money and how much the annuity owner will receive from it. In this case, in the variable annuities there is a certain investment risk that everyone must determine when investing their money. In summary, the amount of risk that everyone is in a position to adopt will determine the amount of acceptable risk and therefore what type of funds will be selected for the investment.

It is possible to consider using a variable annuity for those who:

• They feel comfortable with stock market fluctuations and are willing to accept them in exchange for a greater return to inflation for a longer period of time.
• They are young people who seek to plan for retirement by taking advantage of the long-term stock market.