Which of the following most accurately describes an annuity?
A) an investment which produces increasing cash flows over time
B) a series of unequal cash payments made at equal time intervals
C) a stream of equal cash payments made at equal time intervals
D) a term that does not apply to mortgage payable or bond payable

Question

Quizplus · Accepted Answer

An annuity is a stream of equal cash payments made at equal time intervals. Annuities are often used as a tool for retirement planning and involve making regular contributions to a fund that will later provide a series of payments to the individual. An annuity can be fixed or variable, meaning that the payments may stay the same or vary over time depending on the performance of the investments made with the contributions. An annuity is not a series of unequal cash payments made at equal time intervals, nor does it refer to mortgage or bond payments.

Which of the Following Most Accurately Describes an Annuity