Which One of the Following Statements Concerning an Ordinary Annuity

question 46

Multiple Choice

Which one of the following statements concerning an ordinary annuity is true?

• A) An ordinary annuity consists of equal payments that occur at the beginning of each period over a set period of time.
• B) If two annuities are equal in every way except that one is an ordinary annuity and one is an annuity due, then the ordinary annuity will have a larger future value than the annuity due.
• C) The future value of an ordinary annuity can be computed by dividing the future value of an annuity due by (1 + r).
• D) If two annuities are equal in every way except that one is an ordinary annuity and one is an annuity due, then the ordinary annuity will have a larger present value than the annuity due.
• E) Most financial calculators can compute ordinary annuity problems but not annuity due problems.

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Definitions:

Free Action

An action performed out of one's own volition, free from external constraints or coercion.

Conditions

Specific circumstances or factors affecting the way in which people live or work, especially with regard to their well-being.

Soft Determinists

Philosophers who believe that while human behavior is influenced by external factors, individuals still possess the ability to make choices, blending determinism with free will.

Determinism

The belief in philosophy that every event, including decisions on moral issues, is fully predetermined by preceding causes.