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Exam Series 6 topic 1 question 295 discussion

Actual exam question from FINRA's Series 6
Question #: 295
Topic #: 1
[All Series 6 Questions]

One difference between investing in a variable annuity and in a mutual fund is that:

  • A. the variable annuity guarantees a minimum rate of return on your investment.
  • B. the premiums invested in a variable annuity grow tax-deferred.
  • C. the fees and charges associated with investing in a mutual fund are much higher than those associated with investing in a variable annuity contract.
  • D. Mutual fund investors have voting rights; owners of variable annuity contracts have no voting rights.
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Suggested Answer: B 🗳️
A difference between investing in a variable annuity and in a mutual fund is that the premiums invested in a variable annuity grow tax-deferred. The variable annuity contract does not guarantee a minimum rate of return on your investment, and the fees associated with a variable annuity contract are significantly higher than those associated with an investment in a mutual fund. Owners of variable annuity contracts have voting rights, just like mutual fund investors.

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