CSK - Annuities are subject to disintermediation. See 2007 CFA Exam morning session. Annuities are fixed rate products. If rates go up the customer can cash in his annuity and go elsewhere to get a higher rate.
jimmy i took the exam. i thought answer refered to general disintermediation and not only annuities disintermediation
comp_sci_kid Wrote: ------------------------------------------------------- > ws Wrote: > -------------------------------------------------- > ----- > > People do all kind of crazy things to chase > yield. > > Big difference between what a finaincal > product > > is designed for and how the financial product > is > > sold in the real world. Now days, almost all > > annuity can be terminated early, as long as > > investor is OK with the fee. > > > is it what CFAI says :)?? No, that is what I say and see everyday.
ICSK - I think the review sheet said liquidity requirements would increase with the addition of annuities because of the periodic payments required plus disintermediation specifically from the annuities. I’ll double check.