Sarah purchased a segregated fund contract with a 75% maturity guarantee. Her initial deposit was $100,000. Five years later, the fund's market value has grown to $130,000. If Sarah decided to reset her maturity guarantee at this point, what would be her new guaranteed amount for maturity?

Question: Sarah purchased a segregated fund contract with a 75% maturity guarantee. Her initial deposit was $100,000. Five years later, the fund's market value has grown to $130,000. If Sarah decided to reset her maturity guarantee at this point, what would be her new guaranteed amount for maturity?

Answer options: ✅ $100,000

• $130,000
• $97,500
• $104,000

Correct answer: $100,000

Explanation: A maturity guarantee reset typically locks in the higher of the original guarantee or a specified percentage (often 75% or 100%) of the current market value. Since the guarantee is 75%, and the question asks for the new guaranteed amount FOR maturity, it is the new guaranteed amount. So the new maturity guarantee will be 75% of the new market value, which is 0.75 * $130,000 = $97,500. Wait, a reset would actually lock in the current market value, or a percentage of it. The question is poorly phrased.