Defined terms for the annuity market and lifetime income landscape.
Annuity factor is the present value today of an income stream that pays one unit of currency at each of a specified series of future dates, computed at a chosen discount rate and, in actuarial applications, weighted by survival probability.
Compound annual growth rate is the constant annual rate at which an initial amount would have to grow to reach a final amount over a specified number of years, used as a single-figure summary of investment or asset performance over a period.
Convexity is a measure of how the price sensitivity of a bond changes as interest rates change, capturing the curvature in the price-yield relationship that duration alone misses.
Correlation is a measure of how consistently two sets of values move together, ranging from a coefficient of one for values that move perfectly in step to a coefficient of negative one for values that move perfectly opposite, with zero meaning no consistent relationship.
Deterministic modeling is a way of projecting future outcomes in which every input is held to a specific value and the model produces a single result, without randomness or variation across paths.
