The correct answer is C. Annuity due.
An annuity due is an annuity in which the payments are made at the beginning of each period, rather than at the end of each period as in an ordinary annuity. This means that the first payment is made immediately, followed by a payment at the beginning of each subsequent period.
Annuities due are often used in situations where the investor wants to receive the benefits of the investment as soon as possible. For example, an annuity due might be used to fund a retirement account, in which case the investor would want to start receiving payments as soon as possible after retirement.
Annuities due also have tax advantages in some cases. For example, in the United States, the interest earned on an annuity due is taxed as ordinary income, while the interest earned on an ordinary annuity is taxed as capital gains. This can make annuities due a more attractive option for investors in high tax brackets.
Here is a brief explanation of each option:
- Ordinary annuity: An annuity in which the payments are made at the end of each period.
- Perpetuity: An annuity that continues indefinitely.
- Deferred annuity: An annuity in which the payments do not begin until after a certain period of time.