Which type of annuity has payments that occur at the beginning of the period?

Question

BlackTom AI · Accepted Answer

This question asks which type of annuity features payments at the beginning of each period.
Option 1: 'Ordinary annuity' — In an ordinary (or normal) annuity, payments occur at the end of each period, not the beginning, so this description does not match.
Option 2: 'Annuity due' — This exactly matches the definition: payments are made at the start of each period, which is the key distinguishing feature from an ordinary annuity.
Option 3: 'Perpetuity' — A perpetuity involves infinite payments, typically with payments continuing forever, but it does not specify timing at the beginning of periods and is not defined by the payment point; thus it is not the correct characterization for the timing question.
Option 4: 'Celestial annuity' — This term is not used in standard financial mathematics and appears to be a nonstandard or humorous option; it does not describe a real type of annuity.
In summary, only the description in Option 2 aligns with payments at the beginning of each period, while the others describe different concepts or are invalid terms.

Which type of annuity has payments that occur at the beginning of the period?Single choice

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