Which of the following statements are correct?
(A) Sinking fund can be used only for the purpose it was created.
(B) Sinking fund is a fixed term account.
(C) Saving account can be used in any emergency.
(D) A perpetuity is an annuity in which the periodic payments begin on a fixed date and continue forever.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (B), (C), and (D)
A sinking fund is a fixed-term fund built up by regular payments for one stated purpose; a savings account can be drawn on at any time; a perpetuity is an annuity whose payments never end.
So all four statements describe these terms correctly.
Checking the statements
(A) Sinking fund can be used only for the purpose it was created. — Correct. A sinking fund is kept for the purpose it was created for.
(B) Sinking fund is a fixed term account. — Correct. It is built up by regular payments over a fixed term.
(C) Saving account can be used in any emergency. — Correct. A savings account can be used at any time.
(D) A perpetuity is an annuity in which the periodic payments begin on a fixed date and continue forever. — Correct. This is the definition of a perpetuity.