Describe the differences between perpetuities and annuities. Give examples of both types of products. Then, browse the following Web sites:
- https://personal.vanguard.com/us/funds/byobjective/detail?category=LifeCycle
- https://www.jhannuities.com/Marketing/default.aspx
- What information on the first Web site could be the most applicable to a consumer or investor?
- What information on the second Web site could be the most applicable to a consumer or investor?
- Find 1 example of a perpetuity. How is the perpetuity structured? How can you tell that this is an annuity within the product? Explain your answer.
- Find 1 example of an annuity. How is the annuity structured? How can you tell that this is a perpetuity within the product? Explain your answer.
- Why would an investor prefer one product over the other? Explain your answer.
- How does the time value of money impact the eventual returns of both products?
- If the investor had a short life expectancy, which investment would he or she prefer?
- If the investor had a long life expectancy, which investment would he or she prefer?
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