Question

Which of the following statements about annuities are true?

A. The first cash flow of an annuity due is made on the first day of the agreement.
B. The first cash flow of an ordinary annuity is made on the first day of the agreement.
C. The last cash flow of an annuity due is made on the day covered by the agreement.
D. The last cash flow of an ordinary annuity is made on the last day covered by the agreement.

Answer 1

A)The first cash flow of an annuity due is made on the first day of the agreement.

D)The last cash flow of an ordinary annuity is made on the last day covered by the agreement.

Step-by-step explanation:

An annuity can be regarded as a series of payments which is made at an stable intervals. It can be classified based on the payment frequency. These could be monthly home mortgage payments,

It should be noted that in annuities,

✓The first cash flow of an annuity due is made on the first day of the agreement.

✓The last cash flow of an ordinary annuity is made on the last day covered by the agreement.