Which of the following statements regarding annuities is FALSE?
A)PV of an annuity = C ×
B)The difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments.
C)An annuity is a stream of N equal cash flows paid at regular intervals.
D)Most car loans, mortgages, and some bonds are annuities.

Question

Which of the following statements regarding annuities is FALSE?
A)PV of an annuity = C × 
B)The difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments. 
C)An annuity is a stream of N equal cash flows paid at regular intervals. 
D)Most car loans, mortgages, and some bonds are annuities.

Quizplus · Accepted Answer

The statement that a perpetuity ends after some fixed number of payments is false. A perpetuity is a stream of equal cash flows that continues indefinitely, whereas an annuity has a fixed number of payments. All the other statements about annuities are true. Therefore, option B is the correct answer.

Which of the Following Statements Regarding Annuities Is FALSE