What is a key characteristic of a fixed dollar (conventional) annuity?

A fixed dollar (conventional) annuity is defined by its characteristic of providing a guaranteed rate of return. This means that the investor can expect a predetermined amount of income at regular intervals for a specified period or until death, ensuring a stable and predictable income stream. Unlike other investment vehicles that may fluctuate based on market performance, a fixed dollar annuity is not influenced by external variables such as stock market conditions or inflation rates, making it an appealing choice for those seeking financial security and a reliable source of income.

The other options presented focus on features that do not apply to fixed dollar annuities. For instance, variable payments based on stock market performance and investments in high-risk assets pertain to variable annuities, which can change based on market conditions. Similarly, payments linked to inflation rates align with inflation-indexed annuities, which adjust for cost-of-living increases, contrasting with the fixed nature of payments in a conventional annuity. Thus, the guaranteed rate of return is distinctly what defines a fixed dollar annuity.