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What Is the Different Between an Ordinary Annuity and an Annuity

question 45

Essay

What is the different between an ordinary annuity and an annuity due?
Which occurs more in practice?
Give a common example of both.


Definitions:

Term Deposit

A banking product where money is locked away for a certain period of time at a fixed interest rate.

Maturity

The time at which a financial instrument, investment, or insurance policy reaches its final value and the principal is repaid or returned.

Interest

The price paid for the opportunity to use borrowed finances, generally expressed through an annual percentage.

Simple Interest

Interest calculated only on the principal amount, or on that part of the principal amount which remains unpaid.

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