Match each topic with the correct description.
- Loans
-Payout Annuity
-Annuity
-Compound Interest
a. MANY payments
b. MANY withdrawals
c. MANY deposits
d. ONE deposit
anyone?
- Loans: d. ONE deposit (since loans involve borrowing money and usually require only one initial deposit)
- Payout Annuity: b. MANY withdrawals (a payout annuity involves receiving regular payments or withdrawals over a specified period)
- Annuity: c. MANY deposits (an annuity typically involves making multiple deposits to build up savings or investments over time)
- Compound Interest: a. MANY payments (compound interest refers to the interest earned on both the initial deposit and any accumulated interest, resulting in multiple payments over time)
- Loans: d. ONE deposit
- Payout Annuity: b. MANY withdrawals
- Annuity: c. MANY deposits
- Compound Interest: a. MANY payments
To match each topic with the correct description, we can break down the meanings of each term:
1. Loans: A loan refers to a sum of money borrowed from a lender with the understanding that it will be paid back over a predetermined period of time, usually with interest.
2. Payout Annuity: A payout annuity, also known as an immediate or income annuity, is a financial product that provides the holder with a guaranteed stream of income for a specific period or for the rest of their life, in exchange for a lump-sum payment.
3. Annuity: An annuity is a financial product that allows you to invest money, usually through regular contributions, to provide a future income stream. It can be used as a retirement savings vehicle or as a means to receive a fixed income after retirement.
4. Compound Interest: Compound interest is the interest earned or charged on both the initial principal amount and any previously accumulated interest. In other words, it is the interest that is added to the principal amount, and the resulting total becomes the new base for calculating future interest.
Now, let's match each topic with the correct description:
- Loans: d. ONE deposit (money borrowed as a loan involves a single deposit of funds from the lender to the borrower).
- Payout Annuity: a. MANY payments (a payout annuity involves receiving regular payments over a specific period or for life).
- Annuity: c. MANY deposits (an annuity involves making regular contributions or deposits to build up a future income stream).
- Compound Interest: b. MANY withdrawals (compound interest allows for the growth of an initial deposit or investment, resulting in potential future withdrawals of accumulated interest and principal).
Therefore, the matching descriptions are:
a. MANY payments - Payout Annuity
b. MANY withdrawals - Compound Interest
c. MANY deposits - Annuity
d. ONE deposit - Loans