AuthorTopic: How to know when it is
@2015-08-22 12:17:22
Here's a simple question I came across:

If $1000 is invested today at the beginning of each of the next three years at 12% interest rate (compounded annually), the amount an investor will have at the end of the fourth year will be closes to:
1) $4,779 2) %5,353 3) $6,792

The solution says this is a annuity due! What is a way to distinguish between ordinary annuity and annuity due for this or any other problem?

I appreciate your help:)
@2015-10-09 15:15:07
Due - the payments begin NOW. It helps me to think of due as the "due date" = today. They key words in this question are "today at the beginning"

Ordinary - the payments are paid sometime in the future like the end of the month/year/period. If it were ordinary it would say something like "If $1000 is invested at the end of each month"

CFA Discussion Topic: How to know when it is

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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz