Investment Vehicles

Question 1

In a FIXED annuity, the insurance company assumes which risks?

Answer 1

1. Investment risk
2. Mortality Risk
3. Expense Risk

Question 2

ETF’s are __________ managed

Answer 2

Passively

Question 3

An EIA tied to the S and P 500 Index is sold with a participation rate of 90%, a 10% cap and a 0% floor. In a year when the S&P 500 Index increases by 20%, the principal will be credited with a:

Answer 3

10% increase

The S and P 500 index increased by 20% this year, and with a 90% participation, 18% would be credited to the account. However, the cap sets a maximum that will be credited, so in this example, the cap limits the credit to 10%

Question 4

In what way are Class B mutual fund shares unique?

Answer 4

They convert to class A shares after being held for a certain period of time

Question 5

Are REIT’s derivatives?

Answer 5

No. And neither are mutual or closed-end funds

Question 6

The primary reason for a customer to make a tax shelter investment is the:

Answer 6

Economic viability of the product

Question 7

Are equity indexed annuities an investment product?

Answer 7

NO! Equity Indexed annuities are an insurance product

Question 8

The primary risk associated with investing in ETNs is

Answer 8

Credit risk. The issue is only as good as the guarantee of the issuing bank