Which of the following is TRUE of annuities?
A)An ordinary annuity is an equal payment paid or received at the beginning of each period.
B)An annuity due is a payment paid or received at the beginning of each period that increases by an equal amount each period.
C)An annuity due is an equal stream of cash flows that is paid or received at the beginning of each period.
D)An ordinary annuity is an equal payment paid or received at the end of each period that increases by an equal amount each period.

Question

Quizplus · Accepted Answer

An annuity due is a stream of cash flows with payments made at the beginning of each period, while an ordinary annuity has payments made at the end of each period. The statements in choices A and D are incorrect, and choice B describes a growing annuity, not a regular annuity.

Which of the Following Is TRUE of Annuities