The difference between an ordinary annuityand a annuity due is:A ordinary annuity is when payments aremade at the beginning of each period,while for a annuity due the payments aremade at the end of each period.An annuity due is an annuity where theloan is repaid in one lump sum at the endof the annuity, while for an ordinaryannuity regular payments are madethroughout the period of the annuity.An annuity due is when interest iscompounded at the same time aspayments are made, while for a ordinaryannuity the interest and payment periodsare different.A ordinary annuity is when payments aremade at the end of each period, while fora annuity due the payments are made atthe beginning of each period.An ordinary annuity is when interest iscompounded at the same time aspayments are made, while for a annuitydue the interest and payment periods aredifferent.

Annuity is the uniform annual payments that are made at uniformly over the period of time of annuity…

ne difference between an rdinary annuity and a annuity due is: O A ordinary annuity is when payments are made at the beginning of each period, while for a annuity due the payments are made at the end of each period.

ne difference between an rdinary annuity and a annuity due is: O A ordinary annuity is when payments are made at the beginning of each period, while for a annuity due the payments are made 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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Question

The difference between an ordinary annuity
and a annuity due is:
A ordinary annuity is when payments are
made at the beginning of each period,
while for a annuity due the payments are
made at the end of each period.
An annuity due is an annuity where the
loan is repaid in one lump sum at the end
of the annuity, while for an ordinary
annuity regular payments are made
throughout the period of the annuity.
An annuity due is when interest is
compounded at the same time as
payments are made, while for a ordinary
annuity the interest and payment periods
are different.
A ordinary annuity is when payments are
made at the end of each period, while for
a annuity due the payments are made at
the beginning of each period.
An ordinary annuity is when interest is
compounded at the same time as
payments are made, while for a annuity
due the interest and payment periods are
different.

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With a deferred ordinary annuity, the first payment was made one or more periods prior. the first payment begins one or more periods later. the last payment is made first. the first payment is made last.
Which is NOT an essential element of an ordinary annuity? Select the correct response: The payments are made at equal interval of time. The amounts of all payments are equal. The first payment is made at the beginning of the first period. Compound interest is paid on all amounts in the annuity.
Which of the following statements about annuities are true? Check all that apply. An ordinary annuity of equal time earns less interest than an annuity due. A perpetuity is a series of equal payments made at fixed intervals that continue infinitely and can be thought of as an infinite annuity. When equal payments are made at the end of each period for a certain time period, they are treated as ordinary annuities. When equal payments are made at the end of each period for a certain time period, they are treated as an annuity due.
Which of the following is false? The future value of a deferred annuity is equal to the future value of an annuity not deferred. If the first payment is received at the end of the fifth period, it means the ordinary annuity is deferred for five periods. The present value of a deferred annuity is less than the present value of an annuity not deferred. To calculate the present value of a deferred annuity, determine the present value of an ordinary annuity for the entire period and subtract the present value of the payments which were not received during the deferral period.
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.
A series of equal payments occurring at equal interval of time, known as. Ans: ____________ A type of annuity where the first payment is made at the end of the first period. Ans: ___________________ A type of annuity whose sum is infinite. Ans: _____________ A type of annuity where the first payment is made at the beginning of the first period. Ans: ______________ A type of annuity where the first payment is made later after the end of the first period. Ans: ___________________
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
Annuity due is an annuity whose payment is due at the END of each period. TRUE OR FALSE?
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
The ____ of an annuity is the sum of all payments plus all interest earned. The frequency that interest is computed and added to the balance is called the _____. The rate per compounding period is found by _____.? When money is borrowed, a fee is charged for the money borrowed. This fee is rent paid for the use of another's money, just as rent is paid for the use of another's house. The fee is called ____. It is usually computed as a percentage called the _______. of the principal over a given period of time. The interest rate, unless otherwise stated, is an ____rate.? Fill in the blanks to the questions thanks!
The present value of an annuity due is determined on the last day of the first annuity period. on the first day of the last annuity period. on the last day of the last annuity period. on the date of the first cash flow in the series.
Choose the letter of the correct answer and write it on the space provided _____ 1. A sequence of payments made at equal (fixed) intervals or periods of time. A. Annuity C. Ordinary Annuity B. Annuity due D. Simple Annuity ______2. The amount of each payment. A. Payment interval C. Annuity Payment B. Periodic Payment D. Time payment ______3. It is time between the purchase of an annuity and the start of the payments for the deferred annuity. A. Period of deferral C. Payment interval B. Annuity payment D. Period of payment ______4. A type of annuity in which the payments are made at the end of each payment interval. A. Annuity due C. General Annuity D. Simple Annuity D. Ordinary Annuity ______5. Compounding quarterly means the interest period is A. every year C. every 6 months B. every 4 months D. every 3 months ______6. In a monthly payment of P2,000 for 5 years that will start 7 months from now, what will be the period of deferral? A. 7 B. 5 C. 4 D. 6 ______7. A loan is given an…

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