ERIC Number: EJ1061623
Record Type: Journal
Publication Date: 2013-Jan
Abstractor: As Provided
Reference Count: N/A
The Equity Indexed Annuity: A Monte Carlo Forensic Investigation into a Controversial Financial Product
Carver, Andrew B.
Decision Sciences Journal of Innovative Education, v11 n1 p23-28 Jan 2013
Equity Indexed Annuities (EIAs) are controversial financial products because the payoffs to investors are based on formulas that are supposedly too complex for average investors to understand. This brief describes how Monte Carlo simulation can provide insight into the true risk and return of an EIA. This approach can be used as a project assignment or an in-class assignment to demonstrate the ability of Monte Carlo simulation to solve problems involving uncertainty and nonlinear payoffs.
Descriptors: Monte Carlo Methods, Investigations, Financial Services, Simulation, Risk Assessment, Student Projects, Assignments, Problem Solving, Teaching Methods, Educational Practices, Mathematical Formulas, Program Descriptions
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: N/A
Authoring Institution: N/A