Which of the Following Statements Is Correct

question 8

Multiple Choice

Which of the following statements is correct?

• A) A deferred annuity allows an individual to receive payments from an annuity immediately.
• B) A deferred annuity allows an individual to receive payments from a life insurance policy immediately.
• C) A life insurance policy allows an individual to receive payments from an annuity at once.
• D) A deferred annuity allows an individual to receive payments from a life insurance policy at some future date.
• E) An immediate annuity allows an individual to receive payments from an annuity beginning at once.

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Definitions:

Net Present Value

The sum of all future cash flows, both incoming and outgoing, of an investment, discounted back to their present value to analyze its profitability.

Investment Project

A project involving the allocation of capital resources to long-term assets that produce returns over time.

Working Capital

A measure of a firm's short-term financial health and its ability to cover its short-term obligations with its short-term assets.

Discount Factor

A multiplier used to discount future cash flows back to their present value, reflecting the time value of money.