What is the difference between an annuity and an annuity due?
A)There are no payments in an annuity due.
B)Payments are at the beginning of the month for an annuity and at the end of the month for an annuity due.
C)Payments are at the beginning of the month for an annuity due and at the end of the month for an annuity.
D)There is no difference.

Question

Quizplus · Accepted Answer

The difference between an annuity and an annuity due is when the payments are made. In an annuity, payments are made at the end of the month while in an annuity due, payments are made at the beginning of the month. Therefore, choice C is the correct answer. Choice A is incorrect because an annuity due does make payments. Choice B is incorrect because it incorrectly switches the payment timing of the two types of annuities. Choice D is incorrect because there is indeed a difference between the two types of annuities.

What Is the Difference Between an Annuity and an Annuity