You are considering two equally risky annuities,each of which pays $5,000 per year for 10 years.Investment ORD is an ordinary (or deferred) annuity,while Investment DUE is an annuity due.Which of the following statements is CORRECT?
A) The present value of ORD must exceed the present value of DUE,but the future value of ORD may be less than the future value of DUE.
B) The present value of DUE exceeds the present value of ORD,while the future value of DUE is less than the future value of ORD.
C) The present value of ORD exceeds the present value of DUE,and the future value of ORD also exceeds the future value of DUE.
D) The present value of DUE exceeds the present value of ORD,and the future value of DUE also exceeds the future value of ORD.
E) If the going rate of interest decreases from 10% to 0%,the difference between the present value of ORD and the present value of DUE would remain constant.
Correct Answer:
Verified
Q53: Which of the following investments would have
Q53: You plan to invest some money in
Q54: Which of the following statements is CORRECT?
A)
Q55: Which of the following statements regarding a
Q56: A $150,000 loan is to be amortized
Q57: Which of the following statements regarding a
Q59: A U.S.Treasury bond will pay a lump
Q60: Which of the following statements is CORRECT,assuming
Q61: Last year Rocco Corporation's sales were $700
Q62: Suppose a State of California bond will
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents