question archive Consider the following series of cash flows 100€ TODE 100 TONE 100€ 10 IN 20 30 25 31 28 27 26 Which of the statements A, B, and CIS NOT correct (based on purely financial arguments)? NB: if you think that all three statements are correct, you should answer B
Consider the following series of cash flows 100€ TODE 100 TONE 100€ 10 IN 20 30 25 31 28 27 26 Which of the statements A, B, and CIS NOT correct (based on purely financial arguments)? NB: if you think that all three statements are correct, you should answer B
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Consider the following series of cash flows 100€ TODE 100 TONE 100€ 10 IN 20 30 25 31 28 27 26 Which of the statements A, B, and CIS NOT correct (based on purely financial arguments)? NB: if you think that all three statements are correct, you should answer B. A - This series of cash flow is a regular annuity of size 6 B - This series of cash flow is an annuity due of size 6. C - The beginning date of this annuity is 25 and its ending date is 30. D- These three statements are correct.
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Here the cash flows are starting from time period 25 to time period 30, so this annuity is a regular annuity of 6 periodic payments and the payment starts from time period 25, so this is a regular annuity. In an annuity due the payments starts at the beginning of the time period.
So, statement A is correct, it is a regular annuity, statement C is also correct, the payment starts at 25 and ends at 30. So, the statement which is not correct is B as it is not an annuity due.
The correct answer is B.
