Question

There are two categories of cash flows: single cash flows, referred to as "lump sums," and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. A) An annuity due earns more interest than an ordinary annuity of equal time. B) An annuity is a series of equal payments made at fixed intervals for a specified number of periods. C) An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. D) Ordinary annuities make fixed payments at the beginning of each period for a certain time period.

Answer 1

Answer: Annuities

Explanation: Annuity is a financial term used for an investment which when matured gives a fixed stream of income over a specified period of time.

A. Annuity due earns more interest than an ordinary annuity of equal time

B. An annuity is a series of equal payments made at fixed intervals for a specified number of periods.

C. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period.