Which of the following statements is CORRECT?
A) If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity.
B) The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods.
C) If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.
D) The cash flows for an annuity due must all occur at the ends of the periods.
E) The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month.

Question

Quizplus · Accepted Answer

An annuity is defined by equal cash flows occurring at regular intervals. Choices A, B, C, and D misrepresent the definitions of variable annuities, ordinary annuities, and annuities due.

Which of the Following Statements Is CORRECT