1. Please answer each question in no more than 3-4 sentences.
a) What is the difference between an ordinary and a deferred annuity? Also provide an example of each.
b) How can the future value of an annuity be increased? Use an example to explain how this might be of value for an investor or an individual?
c) In an amortized loan, how can one minimize the interest payment owed to the Bank? Explain the relationship in the amortization schedule that makes this possible.
d) The effective rate may be different than the discounting rate. Explain why this is true and why it may not be true?