Exercise

Indicate whether the listed item is a security or not a security.

1. _____ A valuable antique musical instrument

2. _____ A variable annuity

3. _____ A term life insurance policy

4. _____ A bond issued by a local school district

5. _____ Interest in a collection of antique musical instruments

6. _____ An option on commodities

7. _____ A personal residence

Answers

1. Not a security. Collectibles, such as antiques, are not considered to be securities.

2. Security. Annuities without variable features are not considered to be securities. In contrast, variable annuities are securities.

3. Not a security. Because it is a fixed and non-variable type of insurance contract, a term life insurance policy is not an annuity.

4. Security. All bonds are considered to be securities.