Question

Avery wants does not want to miss out on the expected growth of the stock market. However, he wants to have protection against the loss of his principal. He expects to contribute to an annuity over the next twelve years. What annuity is best suited for Avery?

1) Fixed annuity
2) Variable annuity
3) Indexed annuity
4) Immediate annuity

Answer 1

The best annuity suited for Avery would be a fixed annuity, which offers a guaranteed interest rate and a fixed principal amount to protect against loss of principal. Thus, the option 1 is the correct answer.

Step-by-step explanation:

Avery wants to have protection against the loss of his principal but also wants to benefit from the expected growth of the stock market. In this case, the annuity best suited for Avery would be a fixed annuity. A fixed annuity offers a guaranteed interest rate and a fixed principal amount, so Avery can have the peace of mind knowing that his principal is protected while still earning a stable income over time. This makes it a suitable choice for someone who wants a low-risk investment option.