Which Stream of Cash Flows Is Not an Example of an Annuity

question 47

Multiple Choice

Which stream of cash flows is not an example of an annuity?

• A) Fixed rate mortgage payment
• B) Mortgage payment where the interest rate is reset annually
• C) 48 month car payment
• D) Interest payment on a 10 year Treasury bond

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Definitions:

Sacrifice Ratio

A measure of the economic cost of reducing inflation, calculated as the percentage of annual output lost per one percentage point reduction in inflation.

Inflation

A general increase in prices and fall in the purchasing value of money.

Output

The total amount of goods or services produced by a company or economy in a certain period.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, thereby eroding purchasing power.