Which of the Following Is a Correct Statement About Annuities
Of the following which best describes an annuity. All of the following statements concerning annuities are correct EXCEPT.
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The true statement about annuity is I t i s s e q u e n c e o f e q u a l i n s t a l m e n t s.
. Guaranteeing benefit payments for a stated period of time after reaching age 65. Anyone can set up an annuity and pay income for life Which of the following best describes the risks borne by the annuitant in a nonqualified variable annuity. They are a type of life insurance D.
When an annuity is written whose life expectancy is taken into consideration. A flexible premium annuity allows the insured the option to vary premium deposits. An annuity may have periods of time of any length but should always be of equal length.
Guaranteeing a minimum interest rate. The pure life annuity is ideal for the person who needs maximum income spread out over a lifetime and has several living dependents to whom he or she wishes to leave assets. A 5-year 250 annuity due will have a.
Statements a and b are correct. A 5-year 100 annuity due will have a higher present value than a 5-year 100 ordinary annuity. The present value of an annuity is equal to the cash flow amount divided by the discount rate.
Annuities generally require a large premium or accumulation of smaller premiums prior to the beginning of the liquidation phase. The cash flows for an ordinary annuity. Time value concepts Answer.
All of the following statements concerning annuities are correct EXCEPT. Guaranteeing benefit payments for a stated minimum number of years. B Generally annuity contracts issued today require fixed level funding payments.
An annuity due has payments that occur at the beginning of each time period. D Annuitants can pay the annuity premiums in lump sums. An immediate annuity is one whose first payment is due one payment interval from its purchase date.
C Annuities are sold by life insurance agents. Which of the following statements is CORRECT. Annuities generally offer monthly income until annuitant dies.
The present value of an annuity is equal to the cash flow amount divided by the discount rate. Which of the following statements is true about annuities. Where are premiums from fixed annuities invested.
When an annuity is used to provide savings for the educational expenses a Last In First Out LIFO arrangement is used. The pure life annuity is ideal for the person who needs maximum income spread out over a lifetime and has several living dependents to whom he or she wishes to leave assets. Annuity is called an equal payment or uniform payment series.
Some of the cash flows shown on a time line can be in the form of annuity payments but none can be uneven amounts. The future value of an annuity decreases as the interest rate increases. Which of the following statements is CORRECT.
Which of the following statements about the present value of an annuity is CORRECT. What is the last money to go into an annuity. A time line is not meaningful unless all cash flows occur annually.
To solve for I one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the PV of the negative CFs. The difference between an ordinary annuity and an annuity due is that each of the payments of the annuity due earns interest for one additional year period. Pick up the correct statement from the following.
The future value of an annuity decreases as the interest rate increases. If unspecified you should assume an annuity is an. Backing out of an annuity contract can result in significant surrender charges.
If a series of unequal cash flows occurs at regular intervals such as once a year then the series is by definition an annuity. Which one of the following statements concerning annuities is correct. O You can still solve for I even if CF0 is positive and all the other CFs are negative.
If unspecified you should assume an annuity is an. Which of the following statements regarding annuities is NOT correct. The discount rate increases.
Which one of the following statements concerning annuities is correct. A It is generally paid out to the annuitant in a lump sum cash payment b It has an obligation that is different to the insurance company for both the accumulation period and the liquidation period c Since it can provide monthly income to a beneficiary it is said ti create an immediate estate. All of the following statements regarding annuities are correct EXCEPT.
Time lines are not useful for visualizing complex problems prior to doing actual calculations. B The difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments. An annuity is a series of equal payments made at fixed equal-length intervals for a specified number of periods.
An annuity due has payments that occur at the beginning of each time period. A PV of an annuity C ImageImage. Series of payments at fixed intervals guaranteed for a fixed number of years or the lifetime of one or more individuals.
An annuity due has payments that occur at the beginning of each time period. If unspecified you should assume an annuity is an. Which of the following statements is correct a the.
C An annuity is a stream of N equal cash flows paid at regular intervals. They are never subject to income tax B. A life annuity with period certain is characterized as.
Which of the following statements is CORRECT assuming positive interest rates and other things held constant. Fixed annuities do not provide protection agains inflation. The future value of an annuity decreases as the interest rate increases.
Statements b and c are correct. They use the same mortality tables as life insurance C. A An annuity is a periodic payment.
Which one of the following statements concerning annuities is correct. The present value of an annuity is equal to the cash flow amount divided by the discount rate. Which of the following statements is most correct.
Whereas an annuity purchased with a single lump sum is known as a single premium annuity. They can provide a lifetime income. Which of the following is a correct statement about annuities.
A life annuity with guaranteed minimum payments ensures that the annuitant. Some annuities can never last beyond the life of a single annuitant. An annuity is a serious of equal payments occurring at equal period of time.
Which of the following statements concerning annuities is are correct. D Most car loans. The cash flows of an annuity due occur at the end of each period.
Guaranteeing lifetime benefit payments for two or more people.
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