You Are Considering Two Equally Risky Annuities,each of Which Pays

question 21

Multiple Choice

You are considering two equally risky annuities,each of which pays $5,000 per year for 10 years.Investment ORD is an ordinary (or deferred) annuity,while Investment DUE is an annuity due.Which of the following statements is CORRECT?

• A) A rational investor would be willing to pay more for DUE than for ORD,so their market prices should differ.
• B) The present value of DUE exceeds the present value of ORD,while the future value of DUE is less than the future value of ORD.
• C) The present value of ORD exceeds the present value of DUE,and the future value of ORD also exceeds the future value of DUE.
• D) The present value of ORD exceeds the present value of DUE,while the future value of DUE exceeds the future value of ORD.
• E) If the going rate of interest decreases from 10% to 0%,the difference between the present value of ORD and the present value of DUE would remain constant.

Apply knowledge of past tense verbs to improve writing clarity and accuracy.

Recognize the role of verb tenses in conveying the time of an action or event.

Enhance reading comprehension through awareness of verb tense usage.

Develop linguistic awareness in the context of verb tenses.

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Definitions:

Future Years

Refers to upcoming periods of time, often considered for planning, forecasting, or projections in various contexts.

Marketing Strategies

Comprehensive plans formulated to achieve marketing goals by identifying target audiences and deciding on ways to promote products or services.

Planning Phase

A stage in project management or strategy development where goals are set and actions to achieve them are determined.

Strategic Marketing Process

A systematic approach to identifying opportunities in the market, developing marketing strategies, and implementing and monitoring action plans to achieve business objectives.