When Computing the Future Value of an Annuity, the Higher

question 63

Multiple Choice

When computing the future value of an annuity, the higher the compound frequency

• A) the lower the future value will be.
• B) the higher the future value will be.
• C) the less likely the future value can be calculated.
• D) the more likely the future value can be calculated.

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Definitions:

Stream of Payments

A series of payments made over a period of time, typically referring to annuities, loans, or investments.

Pension Plan Distributions

Payments made from a pension plan to the beneficiary, retiree, or employee, which can be taxable or non-taxable depending on the plan type and contribution history.

Roth IRA

A type of individual retirement account allowing taxed contributions but offering tax-free growth and tax-free withdrawals in retirement under certain conditions.

Compensation

Payment or remuneration received by an individual for services performed, which can include wages, salaries, bonuses, and commissions.