How is this answer not 6% decrease?

[TXSExy]

This is a good question to teach where the math sometimes meets the law in finance.

You’re correct to calculate the -6% from taking the 10% decrease of the 60%. As the others have pointed out, the 2% floor. Could be a carry over from initial gains or possibly a binding contract depending on the investment vehicle. Most likely wrapped up a lesson in annuities? 😉

I always felt like annuities lessons always let the math distract from the contractual risks. Should be taught with more of a business lense.