Question

ann has two children, three and five. she wants to begin investing money for their college educations and consults an investment adviser representative. which of the following would not be an appropriate recommendation? a zero-coupon bonds b a diversified common stock fund c a variable life insurance policy d opening an education ira for each child

Answer 1

A diversified common stock fund would be an appropriate recommendation for Ann to begin investing money for her children's college educations.

Step-by-step explanation:

The appropriate recommendation for Ann to begin investing money for her children's college educations would be a diversified common stock fund. Investing in a diversified common stock fund can provide the potential for long-term capital appreciation, and historically, stocks have provided higher returns than bonds.

Zero-coupon bonds are not an appropriate recommendation because they do not pay periodic interest and are typically bought at a discount, resulting in a lower overall return. Variable life insurance policies are primarily designed for insurance coverage, not as college savings vehicles. Despite the tax advantages of an education IRA, the contribution limits may be lower compared to other investment options, and it may not provide the same growth potential as a diversified common stock fund.

Answer 2

The appropriate recommendation would be option (a) A variable life insurance policy. A variable life insurance policy is not specifically designed for college education savings.

The appropriate recommendation in this case would be option (a) A variable life insurance policy. A variable life insurance policy is not specifically designed for college education savings, whereas the other options mentioned - a diversified common stock fund, opening an education IRA for each child, and zero-coupon bonds - are more suitable for long-term savings and investment purposes.

Complete Question :

Ann has two children, three and five. She wants to begin investing money for their college educations and consults an investment adviser representative. Which of the following would NOT be an appropriate recommendation?

a. A variable life insurance policy

b. A diversified common stock fund

c. Opening an education IRA for each child

d. Zero-coupon bonds