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In the world of finance, an annuity is a contract between you and a life insurance company in which you give the company a lump sum or series of payments, and in return, the insurer promises to ...
The NIFTY 50 index is a free float market capitalisation-weighted index. Stocks are added to the index based on the following criteria: [1] Must have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations, for the basket size of Rs. 100 Million. The company should have a listing history of 6 months.
The level of the index reflects total free float market value of all the stocks in the index relative to a particular base market capitalization value. This methodology is similar to the one employed to add stocks to NIFTY 50. [2] Stocks are added to the index based on the following criteria: [2]
In other words, the number of shares used for calculation is the number of shares "floating", rather than outstanding. An index that is weighted in this manner is said to be "float-adjusted" or "float-weighted", in addition to being cap-weighted. For example, the S&P 500 index is both cap-weighted and float-adjusted. [3]
Where: PV = present value of the annuity. A = the annuity payment per period. n = the number of periods. i = the interest rate. There are online calculators that make it much easier to compute the ...
What Is an Index Annuity? Index annuities–also known as indexed annuities–are a hybrid investment and insurance product that offers investment returns based on a market index, such as the S&P 500.
Participation rates, caps and spreads are known as "moving parts". Most annuities being issued today have only one moving part in determining an index calculation (i.e. only a cap or only a participation rate), however, it is possible to have multiple moving parts in determining an index calculation (i.e. a cap combined with a participation rate).
If your annuity has a 2% spread and the index gains 6%, your annuity will be credited with a 4% gain — 6% less the 2% spread. Many fixed equity-indexed annuities limit losses in the event the ...
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