The correct answer is: A. In an ordinary annuity payments are made or received at the beginning of each period.
An ordinary annuity is a series of equal payments made or received at regular intervals for a fixed period of time. The payments are usually made at the end of each period, but they can also be made at the beginning of each period. If the payments are made at the beginning of each period, the annuity is called an ordinary annuity due.
The main advantage of an ordinary annuity is that it is simpler to calculate than other types of annuities. The main disadvantage is that it is less flexible than other types of annuities. For example, if you need to make a withdrawal from an ordinary annuity before the end of the term, you will usually have to pay a penalty.
Here is a brief explanation of each option:
- Option A: In an ordinary annuity payments are made or received at the beginning of each period. This is the most common type of annuity.
- Option B: On maturity. This means that the payments are made or received at the end of the term of the annuity.
- Option C: 3 months before expiry. This means that the payments are made or received 3 months before the end of the term of the annuity.
- Option D: At the end of each period. This is the same as option A.