1. Which statement is FALSE? A. Future value annuity is an example of annuity. B. A perpetuity is an annuity that has maturity period. C. An annuity is a series of equal payment made for a specified number of years. D. Ordinary annuity is an annuity in which the cash flows occur at the end of each period.

1. Which statement is FALSE? A. Future value annuity is an example of annuity. B. A perpetuity is an annuity that has maturity period. C. An annuity is a series of equal payment made for a specified number of years. D. Ordinary annuity is an annuity in which the cash flows occur at the end of each period.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1. Which statement is FALSE?

A. Future value annuity is an example of annuity.

B. A perpetuity is an annuity that has maturity period.

C. An annuity is a series of equal payment made for a specified number of years.

D. Ordinary annuity is an annuity in which the cash flows occur at the end of each period.

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Which of the following statement is true? a) An ordinary annuity is an annuity in which the cash flow occurs at the start of each period b) None of the above c) A deferred annuity is an annuity in which the first cash flow occurs at the end of the time period between each subsequent cash flow d) with a credit foncier loan ( a loan for a fixed period with regular repayments) as time passes a smaller proportion of each repayment goes to paying off the interest on the loan
The future value of an annuity due is determined one period after the first cash flow in the series. a.True b.False
Which of the following is not true regarding an annuity due? Select the correct response: It is a series of equal cash flows. Payments are made at the start of each period. It is also known as deferred annuity Cash flows occurs for a specific time.
Annuity due is an annuity whose payment is due at the END of each period. TRUE OR FALSE?
An even stream of payments over equal time periods where the interest rate is constant is referred to as a(n): a) Post-annuity. Ob) Annuity. c) Pre-annuity. d) Accumulated Annuity due.
Which of the following statements is CORRECT? The cash flows for an annuity may vary from period to period, but they must occur at regular intervals, such as once a year. The cash flows for an annuity due must all occur at the beginning of the periods. The cash flows for an ordinary annuity occur at the beginning of the periods. If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as an ordinary annuity. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.
An annuity in which the first cash flow occurs at the beginning of the period is called a/an: Oordinary perpetuity. growth annuity. Oordinary annuity. annuity due.
Which of the following statements regarding annuities is FALSE? (1) A difference between an annuity and a perpetuity is that an annuity ends after some fixed number of payments. (II) When using the present value formula of perpetuity (C/r) to calculate the value at date 0, the first payment occurs at date 0. (III) When using the present value formula of growing perpetuity (C/(r-g)) to calculate the value at date 0, the first payment occurs at date 1 and doesn't include growth. (IV) In the growing perpetuity formula (C/(r-g)), g cannot be negative. (V) In the growing perpetuity formula (C/(r-g)), g can be greater than r. O A. II, III, IV, V O B. II O C. IV, V O D. II, IV, V O E. II, IV
1.Which of the following statements is CORRECT? Statement 1. The difference between the PV of an annuity due and the PV of an ordinary annuity is that each of the payments of the annuity due is discounted by one more year (period). Statement 2. The difference between an ordinary annuity and an annuity due is that each of the payments of the annuity due earns interest for one additional year (period). Statement 3. An annuity is a series of equal payments made at fixed equal-length intervals for a specified number of periods. Statement 3 only. All of the statements are correct. None of the statement is correct. Statement 1 only. Statement 2 only. Given some amount to be received several years in the future, if the interest rate increases, the present value of the future amount will Be higher Be variable. Be lower. Cannot tell. Stay the same. WITH EXPLANATION PLEASE
An ordinary annuity is best defined by which one of the following? a. Increasing payments paid for a definitive period of time. b. Equal payments paid at the end of regular intervals over a stated time period. c. Equal payments paid at the beginning of regular intervals for a limited time period. d. Equal payments that occur at set intervals for an unlimited period of time.
Perpetuity is a type of annuity which has infinite period of payments. The present value of a perpetuity equals to the annual payment divided by the required rate of return. True or False
May I ask for an explanation of the question for a better understanding. Thank you! Which of the following statements is NOT TRUE? a. In an annuity due, payments occur at the beginning of the period. b. A perpetuity will never mature at any point in future. c. The present value of a perpetuity can be calculated. d. In an ordinary annuity, payments occur at the beginning of the period.

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