Question

If the index linked to the annuity would have realized 10% growth with a 50% participation rate, yet the index cap was 4%, how much growth would the annuity realize?

Answer 1

The annuity would realize a growth of 5%.

Step-by-step explanation:

To calculate the growth that the annuity would realize, we need to multiply the growth of the index by the participation rate. In this case, the index grew by 10% and the participation rate is 50%. So the growth realized by the annuity would be:

Growth = Index Growth × Participation Rate

Substituting the values, we get:

Growth = 10% × 50% = 5%

Therefore, the annuity would realize a growth of 5%.