Which of the Following Statements Is FALSE

question 105

Multiple Choice

Which of the following statements is FALSE?

• A)Forward rates tend not to be good predictors of future spot rates.
• B)Given the risk associated with interest rate changes,corporate managers require tools to help manage this risk.
• C)One of the most important tools to manage the risk of interest rate changes are interest rate forward contracts.
• D)A spot rate is an interest rate that we can guarantee today for a loan or investment that will occur in the future.

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Definitions:

Liabilities

Economic obligations or debts that an entity is required to pay to another party.

Owner's Equity

The net assets belonging to shareholders or owners of an entity after liabilities are accounted for, denoting their ownership claim.

Net Income

The company's net income, which is the remainder after deducting all expenses, taxes, and costs from the gross revenue.

Drawings

The act of the business owner taking out money or assets from the enterprise for private use.