LT2 Flashcards
What is annuity?
It is a series of equal periodic payments or deposits made regularly or periodically
What are the forms of annuities by correspence with interest periods?
- simple annuity
- general annuity
What are the forms of annuities by term?
- annuity certain
- perpetuity
- contingent annuity
What are the forms of annuities by date of payment?
- ordinary annuity
- annuity due
- deferred annuity
by correspondence with interest periods
What is simple annuity?
It is when payment interval coincides with the interest compounding period
by correspondence with interest periods
What is general annuity?
It is when the payment interval does not coincide with the interest compounding period
by term
What is annuity certain?
It has fixed dates for both first and last payments
by term
What is perpetuity?
It is annuity with a definite beginning date but no ending date
by term
What is contingent annuity?
It is annuity with no fixed terms
by date of payment
What is ordinary annuity?
Payments are made at the end of each payment interval
by date of payment
What is annuity due?
Payments are made at the beginning of each payment interval
by date of payment
What is deferred annuity?
first payment is not made at the beginning nor at the end of the payment interval, but at a later date
