ANNUITY

Question 1

A financial plan or deal
where regular payments
are made or received
over time such as
monthly or yearly.

Answer 1

ANNUITY

Question 2

When the payments are
made at regular intervals,
like monthly or yearly,
and the interest (the extra
money you earn for
lending or saving) is
calculated at the same
frequency.

Answer 2

SIMPLE ANNUITIES

Question 3

When the payments are
still regular, the interest is
calculated at a different
frequency. Maybe you
make monthly payments,
but the interest is
calculated yearly.0

Answer 3

GENERAL ANNUITIES

Question 4

an annuity which
the payments are
made at the end
of payment
interval.

Answer 4

ORDINARY ANNUITIES

Question 5

an annuity in which
the payments
extend over an
indefinite/
indeterminate
length of time

Answer 5

CONTINGENT ANNUITIES

Question 6

an annuity in which the payments are made at beginning of each interval

Answer 6

ANNUITY DUE

Question 7

an annuity in
which payments
begin and end at
definite times.

Answer 7

ANNUITY CERTAIN

Question 8

THE FIXED AMOUNT OF MONEY PAID OR RECEIVED AT REGULAR INTERVALS

Answer 8

REGULAR OR PERIODIC PAYMENT (R)

Question 9

THE TOTAL AMOUNT (SUM) OF ALL PAYMENTS MADE BY THE END OF THE ANNUITY PERIOD, INCLUDING INTEREST.

Answer 9

AMOUNT (FUTURE VALUE) OF AN ANNUITY (F)

Question 10

SUM OF PRESENT VALUES OF ALL THE PAYMENTS TO BE MADE DURING THE ENTIRE TERM OF THE ANNUITY

Answer 10

PRESENT VALUE OF AN ANNUITY (P)

Question 11

DISCOUNT RATE (IN DECIMAL)

Answer 11

ANNUAL INTEREST RATE (I)

Question 12

a sum of money that is paid in regular equal payments

Answer 12

ANNUITY

Question 13

Example:

Installment payments, monthly rentals, and life insurance premiums

Answer 13

ANNUITY

Question 14

the period of time between consecutive payments

Answer 14

Payment Interval

Question 15

Example:

God buys a new smartphone and agrees to pay it via installment. He will pay ₱1 500 every month for 2 years. In this case, the payment interval of the annuity is monthly.

Answer 15

Payment Interval

Question 16

the time from the beginning of the first payment interval to the end of the last payment interval

Answer 16

Term

Question 17

Example:

God buys a new smartphone and agrees to pay it via installment. He will pay ₱1 500 every month for 2 years. In this case, the term of the annuity is 2 years.

Answer 17

Term

Question 18

It is an annuity payable for a definite duration. It means that this annuity begins and ends on a definite date.

Answer 18

Annuity Certain

Question 19

Example:

Celongka buys a new laptop and agrees to pay through installment. She will pay ₱2 500 every month for 2 years.

Answer 19

Annuity Certain

Question 20

It is an annuity payable over a term that has a definite start date but no definite end date.

Answer 20

Perpetuity

Question 21

Example:

Payment of housing rent

Answer 21

Perpetuity

Question 22

It is an annuity payable for an indefinite duration. It means that the beginning or the termination is dependent on some certain event.

Answer 22

Contingent Annuity

Question 23

Example:

Insurance and pension payments

Answer 23

Contingent Annuity

Question 24

It is an annuity certain whose compounding period is the same as the payment interval.

Answer 24

Simple Annuity

Question 25

Example: Leonard buys a brand-new TV with installment payment at the end of each month with interest compounded monthly.

Answer 25

Simple Annuity

Question 26

It is an annuity certain whose compounding period is not the same as the payment interval.

Answer 26

General Annuity

Question 27

Example: Vijayjay buys a brand-new TV with installment payment at the end of each quarter with interest compounded annually.

Answer 27

General Annuity

Question 28

It is an annuity in which the periodic payment is made at the end of each payment interval.

Answer 28

Ordinary Annuity

Question 29

Example: Sam buys a washing machine with installment payment at the end of every month for one year.

Answer 29

Ordinary Annuity

Question 30

It is an annuity in which the periodic payment is made at the beginning of each payment interval.

Answer 30

Annuity Due

Question 31

Example: Gilly buys a washing machine with installment payment at the beginning of every month for one year.

Answer 31

Annuity Due

Question 32

It is the total of the payments and interest earned at the end of the term.

Answer 32

Future Value of an Ordinary Annuity

Question 33

It is the principal that must be invested today to provide the regular payments for the annuity.

Answer 33

Present Value of an Ordinary Annuity