The Future Amount of an Annuity Due Is Determined ________

question 69

Multiple Choice

The future amount of an annuity due is determined ________.

• A) one period after the last cash payment in the series
• B) one period before the last cash payment in the series
• C) at the same time as the first cash payment in the series
• D) at the same time as the last cash payment in the series

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Definitions:

Par Value Bond

A bond that is selling for its original face value, as opposed to above (a premium) or below (a discount).

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, indicating the price change in percentage terms for a yield move of one percent.

Macaulay Duration

A measure of the weighted average time until a bond's cash flows are paid back, used to assess interest rate risk.