Which of the following characteristics is a necessary feature for pricing a set of cash flows as an ordinary annuity? Group of answer choices The period of time between each cash flow must not vary. More than one of the other options are correct. The cash flows must not be a fixed, regular amount. The cash flows must occur on a yearly basis.

7. Future value of annuities There are two categories of cash flows: single cash flows, referred to as "lump sums," and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. O An annuity is a series of egual payments made at fixed intervals for a specified number of periods. O Ordinary annuities make fixed payments at the beginning of each period for a certain time period. O An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. O An annuity due earns more interest than an ordinary annuity of equal time. Which of the following is an example of an annuity? O An investment in a certificate of deposit (CD) A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time Luana loves shopping for clothes, but considering the state of the economy, she has decided…

The Present or Future value of an Annuity Due is always lower than that of ordinary annuity. True B) False Jy

A fixed stream of cash flows occurring at the beginning of each period for a fixed period of time is known as:            Select one: a. Ordinary annuity b. Constant annuity c. Annuity due d. Financial annuity

For each of the following situations, Identify (1) the case as either (a) a present or a future value and (b) a single amount or an annulty. (2) the table you would use in your computations (but do not solve the problem), and (3) the Interest rate and time periods you would use. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places. a. You need to accumulate $10,100 for a trip you wish to take in four years. You are able to earn 10% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit? 1. You want to retire after working 40 years with savings in excess of $1,020,000. You expect to save $4,080 a year for 40…

We have seen before that money deposited into an account with continuous interest follows the A = Pe' formula. However, this required strict conditions %3D that the money cannot be withdrawn or added to throughout the term of the investment. A more complicated model that allows for deposits/withdraws is: A (t) = Pert + K (ert – 1 | where K is the constant amount deposited (K> 0) or withdrawn (K < 0) each year. Problem: A $270,000 home mortgage with a rate of 5.3 % compounded continuously is borrowed for a period of 30 years. (A) Find the amount, K, that is needed to be paid off each year. (note: your K value should be negative because it is a "withdraw" from the principal, but your answer should be reported as a positive number) To pay off the loan in 30years, $ Number would need to be paid off each year. (round to the nearest cent) (B) Using the value found in part (A), how much money will be spent over the period of the loan repaying the initial balance of $270,000? $ Number (round…

Which of the following statements correctly describes aspects of simple interest as discussed in lectures? Group of answer choices A) With simple interest, the future value of any cash flow is simply its current value discounted back at a rate of r% per period for n periods. B) None of the other statements are correct C) A loan that has been created that pays simple interest, will involve interest payments that are calculated on the basis of both the principal amount borrowed as well as any interest that has accumulated to date. D) By convention, simple interest is the main method used for the pricing of long-term bonds. E) More than one of the other statements are correct

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.

The contract value of a GIC is __________; the fair value of a GIC is __________. Select one: a. the present value of future cash flows; the future value of future cash flows b. its cost; the present value of future cash flows c. the future value of future cash flows; the present value of future cash flows d. its cost; the future value of future cash flows

Direction: Define, draw the cash flow diagram, and write the general formula of the following: ANNUITY 1. Ordinary Annuity a) Sum/Future of Ordinary Annuity b) Present Worth of Ordinary Annuity 2. Annuity Due 3. Deferred Annuity