What is a series of equal payments to be received at the beginning of each period, for a finite period of time, called?
A) A perpetuity
B) An annuity due
C) A cash cow
D) A deferred annuity
One characteristic of an annuity is that an equal sum of money is deposited or withdrawn each period.
Answer: TRUE
The present value of an annuity increases as the discount rate increases.
Answer: FALSE
We can use the present value of an annuity formula to calculate constant annual loan payments.
Answer: TRUE
A compound annuity involves depositing or investing a single sum of money and allowing it to grow for a certain number of years.
Answer: FALSE
When repaying an amortized loan, the interest payments increase over time.
Answer: FALSE
An amortized loan is a loan paid in unequal installments.
Answer: FALSE
A loan amortization schedule provides a breakdown of loan payments into principal and interest payments.
Answer: TRUE
Holding all other variables constant, payment per period for an annuity due will be higher than an ordinary annuity.
Answer: FALSE
