Which of the Following Is TRUE of Annuities

question 171

Multiple Choice

Which of the following is TRUE of annuities?

• A)An ordinary annuity is an equal payment paid or received at the beginning of each period.
• B)An annuity due is a payment paid or received at the beginning of each period that increases by an equal amount each period.
• C)An annuity due is an equal stream of cash flows that is paid or received at the beginning of each period.
• D)An ordinary annuity is an equal payment paid or received at the end of each period that increases by an equal amount each period.

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Definitions:

Individual Insurance Plan

A health insurance policy purchased by an individual, as opposed to being provided by an employer.

Group Benefit

An advantage or favorable outcome obtained by a team or group, often in the context of workplace incentives or shared services.

Cash Balance Plan

Retirement plan in which the employer sets up an individual account for each employee and contributes a percentage of the employee's salary; the account earns interest at a predefined rate.

Predetermined Rate

A fixed charge, wage, or value established in advance for transactions, services, or labor, often based on standard criteria or prior agreements.