Final answer:
The statement that a portion of each payment from a purchased annuity represents a return of capital is True. An annuity typically returns the invested capital along with an interest component as part of the payments, which mirrors the expectation of a rate of return on financial capital through saving or investments.
Step-by-step explanation:
Generally, a portion of each payment from a purchased annuity does indeed represent a return of capital, which means that the statement is True. When individuals supply financial capital through saving, they typically expect to receive a rate of return. This holds true for annuities as well, where the return of capital is a part of the payments received by the annuitant. A purchased annuity payments typically comprise both a return on the invested capital and an interest component, reflecting the investment's actual rate of return. For instance, the payments from a bond, which acts as a financial contract to repay borrowed funds along with interest over time, also serve as an analogy to the way annuity payments are structured.