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Which one of the following statements concerning annuities is correct?
A. The present value of an annuity is equal to the cash flow amount divided by the discount rate.
B. An annuity due has payments that occur at the beginning of each time period.
C. The future value of an annuity decreases as the interest rate increases.
D. If unspecified, you should assume an annuity is an annuity due.
E. An annuity is an unending stream of equal payments occurring at equal intervals of time.
Examine the sensitivity of your answers as you vary the number of simulations from 1000, 10,000, 100,000 and 250,000, Pricing a Second to Default Derivative - Pricing a Second to Default Derivative
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