Which of the following statements is CORRECT? Answer The cash flows for an ordin

Question

Which of the following statements is CORRECT?
Answer
The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods.
If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.
The cash flows for an annuity due must all occur at the beginning of the periods.
The cash flows for an annuity may vary
from period to period, but they must occur at regular intervals, such as once a year or once a month.
If some cash flows occur at the beginning
of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity.

Explanation / Answer

If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity.

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