Which of the following statements is true regarding an annuitant in the context of investments in securities?

• A. An annuitant is the individual who receives periodic payments from an annuity contract.
• B. An annuitant is the entity that guarantees the repayment of bonds.
• C. An annuitant is the person who manages a mutual fund portfolio.
• D. An annuitant is the company that issues shares to the public.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the term 'annuitant' in the context of investments. An annuitant is the individual who receives periodic payments from an annuity contract. An annuity is a financial product that provides regular payments over a specified period, often used for retirement income.
2. Step 2: Analyze the options provided in the question. The first option states that an annuitant receives periodic payments from an annuity contract, which aligns with the definition of an annuitant.
3. Step 3: Evaluate the other options. The second option refers to an entity guaranteeing bond repayment, which is unrelated to the concept of an annuitant. The third option mentions managing a mutual fund portfolio, which is the role of a fund manager, not an annuitant. The fourth option describes a company issuing shares, which is unrelated to annuities.
4. Step 4: Confirm that the correct answer is the first option, as it accurately describes the role of an annuitant in the context of investments in securities.
5. Step 5: Conclude that understanding financial terminology is crucial for distinguishing between different roles and entities in investment contexts.