What is the typical annual income percentage range for the Investment Yield Ratio?

The Investment Yield Ratio is a crucial metric used to evaluate the yield on an insurance company's invested assets. It specifically measures the income generated from investments relative to the total assets, providing insight into the financial health and efficiency of investment strategies.

The correct answer reflects the typical range that is generally observed in the insurance industry for the Investment Yield Ratio. A range greater than 3% and less than 6.5% is representative of a reasonable return that insurers aim for, balancing risk and return in their investment portfolios. This range suggests that the company is effectively managing its investments and achieving a yield that supports its operational needs without exposing itself to excessive risk.

Higher yields, such as those greater than 5% and up to 10%, are less common and could indicate either a high-risk investment strategy or an unusual market condition that may not be sustainable long-term. In contrast, yields under 3% might indicate a conservative investment approach or adverse market conditions that limit returns. Thus, the chosen range reflects a level of performance that is both attainable and prudent for entities operating in this sector.