Multiple Choice
Which of the following best describes the APR (Annual Percentage Rate), or stated rate, for an investment in securities?
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7. Receivables and Investments
Introduction to Investments in Securities
Multiple Choice
Which type of annuity allows benefit payments to be stretched over a number of years?
A
Immediate annuity
B
Variable annuity
C
Term-certain annuity
D
Deferred annuity
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 is often used for retirement planning or income distribution.
Identify the key characteristic of a term-certain annuity: A term-certain annuity provides payments for a specific, predetermined number of years, regardless of whether the annuitant is alive during the term.
Differentiate between the types of annuities mentioned: Immediate annuities start payments right after the initial investment, variable annuities have payments that fluctuate based on investment performance, and deferred annuities delay payments until a future date.
Match the description in the question to the correct type of annuity: The question specifies that the payments are stretched over a number of years, which aligns with the definition of a term-certain annuity.
Conclude that the correct answer is 'Term-certain annuity' based on its unique feature of providing payments over a fixed term, as opposed to other types of annuities that have different payment structures.
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