COLLEGE OF ARTS AND SCIENCESMathematics and Physics DepartmentCase Analysis Mathematics of Investment

General Directions: : Read the attached journal entitled Annuities and Suitability: Reflections on the State of the Debate by John L. Olsen. Answer the following questions that follow. Place your answers on the quiz booklet (with lines). Submission will be on or before January 14, 2013.

I. Identify whether the following statements are TRUE or FALSE.1. The perception of an annuity is that only of as an investment.2. Some of the benefits annuities offer has mostly to do with financial ratios.3. If any principal must remain after the income has been distributed, an immediate annuity is appropriate.4. The provisions that these guaranteed living benefits (GLBs) provide are designed to enhance returns.5. All annuities are more or less alike.

II. Fill in the blanks.1. Any annuity is a ____________.2. How well a particular annuity will accomplish a particular job depends upon the ________ and ____________.3. When the income period is a fixed number of years, ____________ generally provide a greater amount than can be assured from any investment alternative.4. The key to understanding annuities, what they can do and the situations appropriate for them, is a recognition that an annuity is all about ________.

III. Answer the following completely:1. In variable deferred annuities, what are the two advantages of allocating a portion of the clients money to them?2. What is the essence of all guaranteed living benefits (GLBs)?3. Why do investors value these GLBs more highly than others?4. When is immediate annuity the only solution?5. When will a deferred annuity perform better in terms of tax benefits?