For Investors, an Annuity Due ​

question 43

Multiple Choice

For investors, an annuity due ​

• A)
• ​is to be preferred to an ordinary annuity
• B)
• ​is worth less than an equal lump sum received at the end of the time period
• C)
• ​receives payments at the end of the time period
• D)
• ​produces unequal payments

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Definitions:

Interest Rate

The interest rate that a borrower must pay to a lender in exchange for using borrowed funds.

Accrued Interest

Interest that's been accrued but is still pending payment or receipt.

Deposit

A sum of money placed in an account or with a third party as security or for future payment.

Days

Units of time measuring 24 hours, often used to calculate interest, maturity dates, and other financial time periods.