Which of the Following Statements Is CORRECT

question 118

Multiple Choice

Which of the following statements is CORRECT?

• A) The cash flows for an ordinary (or deferred)annuity all occur at the beginning of the periods.
• B) If a series of unequal cash flows occurs at regular intervals,such as once a year,then the series is by definition an annuity.
• C) The cash flows for an annuity due must all occur at the ends of the periods.
• D) The cash flows for an annuity must all be equal,and they must occur at regular intervals,such as once a year or once a month.
• E) If some cash flows occur at the beginning of the periods while others occur at the ends,then we have what the textbook defines as a variable annuity.

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Definitions:

Entire Income

The total amount of income received from all sources before any deductions, taxes or expenses are subtracted.

Units

A standard or basic quantity into which an item of supply is divided, issued, or used.

Clothing

Garments and articles worn on the body, typically made from fabric or textiles.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford given their income and the prices of goods and services.