Question

Perpetuities are also called annuities with an extended or unlimited life. Based on your understanding of perpetuities, answer the following questions. Which of the following are characteristics of a perpetuity? Check all that apply.

(A) The principal amount of a perpetuity is repaid as a lump-sum amount
(B) In a perpetuity, returns-m the form of a series of identical cash flows-are earned.
(C) A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue Indefinitely Into the future.
(D) A perpetuity continues for a fixed time period.

Answer 1

(C) A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue Indefinitely Into the future.

Step-by-step explanation:

a false

the principal is never repaid on a perpetuity

d false the perpetuity is for an indefinite period of time.

definition:

the perpetuity consist in a principal which yield a return over time indefinite. this return do not include any amortization in the principal neither principal installment are done through the investment or loan life