1.
What is an annuity?
Solution
Annuity is a series of the same payments recevied over a period of time .
According to SEC ,
An annuity is a contract between you and an insurance company that is designed to meet
retirement and other long-range goals, under which you make a lump-sum payment or series
of payments. In return, the insurer agrees to make periodic payments to you beginning
immediately or at some future date.
There can be different payment intervals say a year , month , six month etc.
Annuities are bascially of two types
1) Annuity regular/ordinary
2) Annuity Due
The future value and present value of annuity is determined time to time to make financial
decisions.