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Annuities are a series of constant cash flows that have been received over a certain period of time. However, not all annuities are created equal.
Annuities are a series of constant cash flows that have been received over a certain period of time. However, not all annuities are created equal. Some annuities adjust the payments based on certain macroeconomic factors. Based on your understanding of growing annuities, is the statement below true or false? While analyzing a growing annuity, you need to express the interest rate, the future value, and the payment in real rather than nominal terms. False True You invested in an aggressive growth fund and expect to earn 16.96% annually over the next five years. However, due to strong growth, inflation is expected to be 8.40%. What should be your expected real rate of return? 9.48% 8.69% 5.93% 7.90%
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