An annuity is a series of equal-sized cash flows occurring over equal intervals of time. An ordinary annuity exists when the cash flows occur at the end of each period. An annuity due exists when the cash flows occur at the beginning of each period.

Which of the following statements about annuities are true?

1) The first cash flow of an annuity due is made on the first day of the agreement.

2) The first cash flow of an ordinary annuity is made on the first day of the agreement.

3) The last cash flow of an annuity due is made on the day covered by the agreement.

4) The last cash flow of an ordinary annuity is made on the last day covered by the agreement.

Answer rating: 100% (QA)

1 The first cash flow of an annuity due is made on the first day of the agreement TRUE Annuitydue Pa... View the full answer