Future value of annuities Which of the following statements about annuities are true?

a. An annuity is a series of equal payments made at fixed intervals for a specified number of periods.
b. Ordinary annuities make fixed payments at the beginning of each period for a certain time period.
c. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period.
d. An annuity due earns more interest than an ordinary annuity of equal time.

The correct answers are letters "A" and "C": An annuity is a series of equal payments made at fixed intervals for a specified number of periods; An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period.

Explanation:

Annuities are contracts purchased from insurance companies that can be paid in a lump-sum or in small payments to have a series of equal re-payments from that company regularly during an interval of time. Due annuities request those payments to be made at the beginning of having signed the contract.