Question
Select the response that best identifies the type of financial instrument described Responses may be used more than once or may not be used at
Select the response that best identifies the type of financial instrument described
Responses may be used more than once or may not be used at all.
A. | Uneven Cash Flow |
B. | Lump Sum |
C. | Perpetuity |
D. | Ordinary Annuity |
E. | Annuity Due |
1. An asset produces the following cash flows: $250 at the end of year 1; $375 at the end of year 3; and $450 at the end of year 5.
2. You make $350 payments into an account every year for 5 years; the payments are made at the beginning of the year.
3. A retirement account pays you $5,000 each year for 20 years.
4. A life insurance policy promises to pay you $500 per year forever.
5. You invest $750 today into an account that pays 4.5% annual interest.
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