1. Lottery payoffs and payment for rental apartments are examples of
a. lump sum amount
b. deferred annuity
c. annuity due
d. payment fixed series
2. Interest paid (earned) on only the original principal borrowed (lent) is often referred to as __________.
a. present value
b. simple interest
c. future value
d. compound interest
3. Payments if it is made at end of each period such as an end of year is classified as
a. ordinary annuity
b. deferred annuity
c. annuity due
d. Both A and B
4. Which of the following statements is false?
a. An annuity is a stream of equal payments.
b. An annuity due has the payments made at the beginning of each period.
c. An ordinary annuity has the payments made at the end of each period.
d. Annuity tables provide annuity interest rate factors for ordinary annuity streams.
5. The present value of an annuity increases as:
a. the number of discount periods decreases
b. the discount rate decreases
c. the payment amount per period decreases
d. the annual interest rate decreases