A(n) ____ is a financial instrument that agrees to pay an equal amount of money per period into the indefinite future (i.e., forever).
A) annuity
B) annuity due
C) sinking fund
D) perpetuity

Question

Quizplus · Accepted Answer

A perpetuity is a type of financial instrument that guarantees payment of a fixed amount of money at regular intervals forever. It is a type of annuity, but whereas an annuity has a fixed end date, a perpetuity has no end date, making it a type of infinite annuity. Therefore, the correct choice is D.

A(n) ____ Is a Financial Instrument That Agrees to Pay