Question

An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is

Answer 1

Complete Question:

An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is:

Group of answer choices

A) the safety of the principal invested.

B) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices.

C) the yield is always higher than mortgage yields.

D) the yield is always higher than bond yields.

Answer:

B) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices.

Explanation:

An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices.

Generally, common stocks are considered by financial experts or broker-dealers to be a suitable type of investment of variable annuities because the prices of common stocks in the market are not fixed and as such they are affected by economical changes such as inflation or recession.