S
Snowy
Member
Explain part 4) the decline in historic annuity rates.
1) what does the annuity rate represent here exactly in this question, and what is the relationship between annuity rates and interest rates?
2) The text says "Annuities now pay out less for a given sum" from bullet point number 13 in the question - this means that annuity rates are higher now? For example a sum of 10000 divided by a higher figure would give less payout, no?
3) lower interest rates have added to this-ok since prices of annuities are higher so they will pay out less than before
4) "historical annuity rates are much higher due to higher interest rates" from bullet point number 14 in the question - I don't get this bit - if we look at the first table given in the question we see that at 3% ax = 20.11 while at 9% ax = 10.55. So doesn't this mean that higher interest rates mean lower annuity rates?
1) what does the annuity rate represent here exactly in this question, and what is the relationship between annuity rates and interest rates?
2) The text says "Annuities now pay out less for a given sum" from bullet point number 13 in the question - this means that annuity rates are higher now? For example a sum of 10000 divided by a higher figure would give less payout, no?
3) lower interest rates have added to this-ok since prices of annuities are higher so they will pay out less than before
4) "historical annuity rates are much higher due to higher interest rates" from bullet point number 14 in the question - I don't get this bit - if we look at the first table given in the question we see that at 3% ax = 20.11 while at 9% ax = 10.55. So doesn't this mean that higher interest rates mean lower annuity rates?