Fred owns a 10 year Market-Value Adjusted Annuity. If Fred decides to cash in his contract after four years and the market values decreased by 4% during that time, what would the market value adjustment be for the contract?

Question

Quizplus · Accepted Answer

If Fred decides to cash in his market value adjusted contract after four years and the market value decreases 4% during that time, the market value adjustment would be positive and help to offset the surrender charge Fred would pay for cashing in early. This increase or decrease in value is also affected by whether or not the market value adjusted annuity is registered or not. When market value adjusted annuities are registered, the adjustment applies to both the principal and interest.

Fred Owns a 10 Year Market-Value Adjusted Annuity