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Equivalent annual annuity |
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Definition of Equivalent annual annuityEquivalent annual annuityThe equivalent amount per year for some number of years that has a present
Related Terms:Equivalent annual benefitThe equivalent annual annuity for the net present value of an investment project. ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. Annual fund operating expensesFor investment companies, the management fee and "other expenses," Annual percentage rate (APR)The periodic rate times the number of periods in a year. For example, a 5% annual percentage rate (APR)Interest rate that is annualized using simple interest. Annual percentage yield (APY)The effective, or true, annual rate of return. The APY is the rate actually Annual PremiumYearly amount payable by a client for a policy or component. Annual reportYearly record of a publicly held company's financial condition. It includes a description of the Annual ReportThe report required by the Stock Exchange for all listed companies, containing the company’s financial statements. Annual reportA report issued to a company’s shareholders, creditors, and regulatory annual returnThe fund return, for any 12-month period, including changes in unit value and the reinvestment of distributions, but not taking into account sales, redemption, distribution or other optional charges or income taxes payable by any unitholder that would reduce returns. Annualized gainIf stock X appreciates 1.5% in one month, the annualized gain for that sock over a twelve Annualized holding period returnThe annual rate of return that when compounded t times, would have AnnuityA regular periodic payment made by an insurance company to a policyholder for a specified period AnnuityA series of payments or deposits of equal size spaced evenly over AnnuityA series of payments over a period of time. The payments are usually annuityEqually spaced level stream of cash flows. AnnuityA contract which provides an income for a specified period of time, such as a certain number of years or for life. An annuity is like a life insurance policy in reverse. The purchaser gives the life insurance company a lump sum of money and the life insurance company pays the purchaser a regular income, usually monthly. AnnuityPeriodic payments made to an individual under the terms of the policy. Annuity dueAn annuity with n payments, wherein the first payment is made at time t = 0 and the last Annuity Dueannuity where the payments are to be made at the beginning of annuity duea series of equal cash flows being received or paid at the beginning of a period annuity dueLevel stream of cash flows starting immediately. Annuity factorPresent value of $1 paid for each of t periods. annuity factorPresent value of an annuity of $1 per period. Annuity in arrearsAn annuity with a first payment on full period hence, rather than immediately. Annuity PeriodThe time between each payment under an annuity. Back To Back AnnuityThis term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application. Bond-equivalent basisThe method used for computing the bond-equivalent yield. Bond equivalent yieldBond yield calculated on an annual percentage rate method. Differs from annual Bond-equivalent yieldThe annualized yield to maturity computed by doubling the semiannual yield. Bond Equivalent YieldBond yield calculated on an annual percentage rate method CASH AND CASH EQUIVALENTSThe balance in a company’s checking account(s) plus short-term or temporary investments (sometimes called “marketable securities”), which are highly liquid. Cash and equivalentsThe value of assets that can be converted into cash immediately, as reported by a Cash equivalentA short-term security that is sufficiently liquid that it may be considered the financial Cash-equivalent itemsTemporary investments of currently excess cash in short-term, high-quality Cash EquivalentsHighly liquid, fixed-income investments with original maturities of three months or less. Cash EquivalentsInstruments or investments of such high liquidity and safety that they are virtually equal to cash. Certainty equivalentAn amount that would be accepted in lieu of a chance at a possible higher, but Common stock equivalentA convertible security that is traded like an equity issue because the optioned Corporate taxable equivalentRate of return required on a par bond to produce the same after-tax yield to Coupon equivalent yieldTrue interest cost expressed on the basis of a 365-day year. Deferred AnnuityAn annuity providing for income payments to commence at a specified future time. Deferred nominal life annuityA monthly fixed-dollar payment beginning at retirement age. It is nominal Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of effective annual interest rateInterest rate that is annualized using compound interest. Effective annual yieldannualized interest rate on a security computed using compound interest techniques. Effective Annual Yieldannualized rate of return on a security computed using compound Equivalent annual cash flowannuity with the same net present value as the company's proposed investment. Equivalent annual costThe equivalent cost per year of owning an asset over its entire life. equivalent annual costThe cost per period with the same present value as the cost of buying and operating a machine. Equivalent bond yieldannual yield on a short-term, non-interest bearing security calculated so as to be Equivalent loanGiven the after-tax stream associated with a lease, the maximum amount of conventional Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax equivalent units of production (EUP)an approximation of the number of whole units of output that could have been Fixed-income equivalentAlso called a busted convertible, a convertible security that is trading like a straight Guaranteed Interest Annuity (GIA)Interest bearing investment with fixed rate and term. Individual Retirement AnnuityAn IRA comprised of an annuity that is managed Nominal annual rateAn effective rate per period multiplied by the number of periods in a year. Normal annuity formThe manner in which retirement benefits are paid out. Ordinary AnnuityAn annuity where the payments are made at the end of each ordinary annuitya series of equal cash flows being received RAMs (Reverse-annuity mortgages)Mortgages in which the bank makes a loan for an amount equal to a Single-premium deferred annuityAn insurance policy bought by the sponsor of a pension plan for a single Stated annual interest rateThe interest rate expressed as a per annum percentage, by which interest Variable AnnuityA form of annuity policy under which the amount of each benefit is not guaranteed or specified. The amounts fluctuate according to the earnings of a separate investment account.
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