An Annuity Is ________

question 13

Multiple Choice

An annuity is ________.

• A) a noncash expense
• B) a series of equal cash flows at equal time intervals
• C) an investment product whose funds are invested in the stock market
• D) a rate at which an investment's present value of all expected cash inflows equals the present value of project's expected cash outflows.

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Definitions:

Yield To Call

The yield to call is the return an investor would receive if they held a bond until its call date, when the issuer has the option to repay the bond before its maturity date at a specified price.

Nominal Yield

The yearly interest income from a bond or fixed-income security, expressed as a percentage of the bond's face value.

Semiannually

Occurring twice a year, typically every six months.

Call Price

The price at which a bond or other security can be repurchased by the issuer before its maturity date, usually at a premium to the face value.