ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An ordinary annuity is a series of regular payments made at the end of each period, such as monthly or quarterly. In an annuity due, by contrast, payments are made at the beginning of each period.

Detailed explanation-2: -In some cases, as with salaries or a senior’s pension, the payments are made at the end of a payment interval. This is referred to as an ordinary annuity.

Detailed explanation-3: -Answer is Ordinary or Immediate Annuity. An ordinary annuity or immediate annuity is where payments are made at the end of each payment period, i.e. 1st payment is made at the end of the 1st payment interval, and so on. Examples are repayment of car loans, house mortgage etc.

Detailed explanation-4: -An ordinary simple annuity has the following characteristics: Payments are made at the end of the payment intervals, and the payment and compounding frequencies are equal. The first payment occurs one interval after the beginning of the annuity. The last payment occurs on the same date as the end of the annuity.

Detailed explanation-5: -Annuity due refers to a series of equal payments made at the same interval at the beginning of each period. Periods can be monthly, quarterly, semi-annually, annually, or any other defined period.