Annuity (finance Theory)
In finance theory, an annuity is a terminating "stream" of fixed payments, i.e., a collection of payments to be periodically received over a specified period of time. The valuation of such a stream of payments entails concepts such as the time value of money, interest rate, and future value.
Examples of annuities are regular deposits to a savings account, monthly home mortgage payments and monthly insurance payments. Annuities are classified by the frequency of payment dates. The payments (deposits) may be made weekly, monthly, quarterly, yearly, or at any other interval of time.
Other related articles:
... Fixed annuities € These are annuities with fixed payments ... Variable annuities € Unlike fixed annuities,these are regulated by the SEC ... Equity-indexed annuities € Lump sum payments are made to an insurance company ...