Which of the following statements regarding annuities is FALSE?
A)The difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments.
B)Most car loans, mortgages, and some bonds are annuities.
C)PV of an annuity = C ×
D)An annuity is a stream of N equal cash flows paid at regular intervals.

Question

Which of the following statements regarding annuities is FALSE?
A)The difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments. 
B)Most car loans, mortgages, and some bonds are annuities. 
C)PV of an annuity = C × 
D)An annuity is a stream of N equal cash flows paid at regular intervals.

Quizplus · Accepted Answer

The statement that "the difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments" is actually false. The main difference between an annuity and a perpetuity is that an annuity has a set end date while a perpetuity continues indefinitely.

Which of the Following Statements Regarding Annuities Is FALSE