ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When the interest is paid out
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when the principal is paid in the period
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the interest rate
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one uses simple interest, one uses compound interest
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Detailed explanation-1: -An immediate annuity begins paying out as soon as the buyer makes a lump-sum payment to the insurer. A deferred annuity begins payments on a future date set by the buyer.
Detailed explanation-2: -Understanding Annuities An annuity that begins paying out immediately is referred to as an immediate annuity, while one that starts at a predetermined date in the future is called a deferred annuity. The duration of the disbursements can also vary.
Detailed explanation-3: -There are three main types of annuities: fixed annuities, fixed-indexed annuities and variable annuities. Variable annuities can be immediate or deferred. The immediate and deferred classifications indicate when you will begin receiving your annuity payments.
Detailed explanation-4: -If the payment frequency is the same as the compounding frequency, this is called a simple annuity. When interest is charged to the account monthly and payments are also made monthly, you determine principal and interest using simplified formulas.