To Determine the Future Value Factor for an Annuity Due

question 106

Multiple Choice

To determine the future value factor for an annuity due for period n when given tables only for an ordinary annuity:

• A) Obtain the FVA factor for n + 1 and deduct 1.
• B) Obtain the FVA factor for n and deduct 1.
• C) Obtain the FVA factor for n - 1 and add 1.
• D) Obtain the FVA factor for n + 1 and add 1.

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Definitions:

Small Denomination Time Deposits

Fixed-term deposit accounts offered by banks that have a lower minimum deposit requirement and are usually associated with lower interest rates.

Large Denomination Time Deposits

Savings accounts or certificates of deposit in large amounts, usually over $100,000, that earn interest over a fixed period of time.

M2

An assessment of the total amount of money in circulation, encompassing physical currency, deposits in checking accounts, and liquid assets like savings accounts and money market instruments.

M3

A gauge of monetary supply encompassing M2 as well as sizable time deposits, institutional money market funds, and additional significant liquid assets.