Annuity

What it means

A series of equal cash flows at equal intervals. An ordinary annuity pays at the end of each period; an annuity due pays at the beginning.

The exam angle

An annuity due is worth exactly (1 + r) times the ordinary annuity of the same flows — one extra period of compounding on every payment.

Where it appears in the syllabus

• Quantitative MethodsCFA Level I · exam weight 11–14% · Returns and benchmarks, time value, distributions, portfolio maths, regression.

On the calculator

Time value of money questions on the BA II Plus come down to five keys and a few traps (payments per year, BGN mode, the sign of cash flows). Watch the keystrokes video.

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