2
QuizMultiple Choice

Annuities

Question 2 • FT GMS AMDM B IC – 72

In the Present Value of an Ordinary Annuity formula, what does the n represent?

Answer
A
nominal interest rate
B
number of payments
C
number of periods
D
decimal number of percentage

Explanation

In the present value formula for an ordinary annuity, n is the total number of periods in the annuity. Each period corresponds to one payment, but the choice that defines n is “number of periods.”

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