Which one of the following is an example of an annuity?
A) the receipt of $50 in January, March, April, June, August, September and December
B) the payment of $259 a month for three consecutive years
C) the payment of $389 in January, $200 in February, and $200 in March
D) the receipt of $100 a month for three months and then $150 a month for two months

Question

Quizplus · Accepted Answer

An annuity is a series of equal payments made at regular intervals. Option B, the payment of $259 a month for three consecutive years, fits this definition as it involves equal payments ($259) at regular intervals (monthly) for a fixed period (three years).

Which One of the Following Is an Example of an Annuity