Multiple Choice
Which of the following is a common type of investment that is often overlooked by investors?
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7. Receivables and Investments
Introduction to Investments in Securities
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Which of the following is another term for the accumulation period of an annuity?
A
Distribution period
B
Funding period
C
Maturity period
D
Amortization period
Verified step by step guidance1
Understand the concept of an annuity: An annuity is a financial product that provides a series of payments made at equal intervals. It has two main phases: the accumulation period and the distribution period.
Define the accumulation period: This is the phase during which contributions or payments are made into the annuity. The goal is to grow the investment through contributions and potential earnings.
Compare the given options: The 'distribution period' refers to the phase when the annuity starts paying out to the annuitant. The 'maturity period' is not a standard term used in the context of annuities. The 'amortization period' typically refers to the time it takes to pay off a loan, not an annuity.
Identify the correct term: The 'funding period' is another term for the accumulation period, as it describes the time when funds are being contributed to the annuity.
Conclude: The correct answer is 'Funding period,' as it aligns with the definition of the accumulation period in an annuity.
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