You Have the Choice of Two Equally Risk Annuities,each Paying

question 60

Multiple Choice

You have the choice of two equally risk annuities,each paying $5,000 per year for 8 years.One is an annuity due and the other is an ordinary annuity.If you are going to be receiving the annuity payments,which annuity would you choose to maximize your wealth?

• A) the annuity due
• B) the ordinary annuity
• C) Since we don't know the interest rate, we can't find the value of the annuities and hence we cannot tell which one is better.
• D) either one because they have the same present value

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Definitions:

Big Five Personality Traits

Refers to five broad dimensions of personality used to describe human personality, including openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Nomothetic

An approach in psychology that focuses on studying what we share with others, using statistical methods to derive general laws.

Idiographic

Pertaining to the study or approach focusing on the individual, often used in contrast to nomothetic approaches that focus on generalizations.

Self-actualized Personality

A psychological condition or achievement where an individual realizes their full potential, often associated with peak experiences and true personal fulfillment.