Which of the Following Comparison Statements Is True

question 100

Multiple Choice

Which of the following comparison statements is true?

• A) An annuity has equal payments, a perpetuity does not.
• B) Both an annuity and a perpetuity have payments with equal values.
• C) An annuity covers a longer period of time than a perpetuity.
• D) An annuity has a constant rate of return, a perpetuity does not.
• E) An annuity has a different rate than a perpetuity.

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Definitions:

Fixed Costs

Fixed costs are those business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed to variable costs in a company's cost structure.

Break-even Point

The point at which total revenues equal total costs, resulting in neither profit nor loss.

Variable Cost

Costs that vary depending on the amount of goods produced or the scale of operations in a business.