Which of the Following Statements Regarding Annuities Is FALSE

question 37

Multiple Choice

Which of the following statements regarding annuities is FALSE?

• A)PV of an annuity = C ×
• B)The difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments.
• C)An annuity is a stream of N equal cash flows paid at regular intervals.
• D)Most car loans,mortgages,and some bonds are annuities.

---

Definitions:

Discounted Note

A debt instrument sold for less than its face value that will pay the face value at maturity.

Proceeds

Maturity value less bank discount.

Contingent Liability

Liability on the part of one who discounts a note if the maker of the note defaults at maturity date.

Discounted Note

A debt instrument that is sold or issued for less than its face value.