Classification 1
...is a sequence of payments made at regular time intervals
Annuity
The time period in which these payments are made is called the..
term
The main characteristic of the "annuity certain" is ...
that term is given by a fixed time interval
The main characteristic of the "perpetuity" is ...
that it begins at a definite date but extends indefinitely
The main characteristic of a contingent annuity is that..
term is not fixed in advance.
Examples of annuities are (3):
Regular deposits to a savings account, monthly home mortgage payments, and monthly insurance payments
An annuity in which the payments are made at the end of each payment period is called
an ordinary annuity
An annuity in which the payments are made at the beginning of each period is called
an annuity due
An annuity in which the payment period coincides with the interest conversion period is called
simple annuity
An annuity in which the payment period differs from the interest conversion period is called
complex annuity