Ch 5

Question 1

Annuity

Answer 1

finite series of equal payments that occur at regular intervals

Question 2

ordinary annuity

Answer 2

equal payments occur at the end of each period

Question 3

ordinary annuity ex

Answer 3

retirement accounts, consumer loans (car loans), mortgage loans, coupon payments for bonds, education savings accounts

Question 4

annuity due

Answer 4

equal payments occur at the beginning of each period (monthly rent)

Question 5

Perpetuity

Answer 5

infinite series of equal payments (preferred stock that pays a constant dollar dividend indefinitely, consols)