Which of the following are risks associated with a fixed annuity purchase?

The choice of compound interest as a risk associated with a fixed annuity purchase does not align with the characteristics of fixed annuities. Fixed annuities generally offer a guaranteed interest rate that often compounds over time, which can be an advantage rather than a risk.

When considering the risks associated with a fixed annuity purchase, factors such as low interest rates and the inability to keep pace with inflation are significant concerns. Fixed annuities typically provide a steady stream of income, but in a low interest rate environment, the rates offered may not be favorable and can limit the returns on the investment. Additionally, because the interest rate is fixed, if inflation rises, the purchasing power of the money received in the future can decrease, leading to an inability to keep pace with inflation.

Low liquidity is also a notable risk. Funds invested in a fixed annuity may be locked in for a specified period, and withdrawing them early could result in surrender charges, limiting the investor's access to their money when needed.

Understanding these risks is crucial for investors considering a fixed annuity, as it helps them make informed decisions based on their financial goals and market conditions.