Which of the Following Statements Is FALSE

question 1

Multiple Choice

Which of the following statements is FALSE?

• A)The actual cash flow that the investor will get to keep will be reduced by the amount of any tax payments.
• B)The equivalent after-tax interest rate is r(1 - τ).
• C)The right discount rate for a cash flow is the rate of return available in the market on other investments of comparable risk and term.
• D)To compensate for the risk that they will receive less than promised if the firm defaults,investors demand a lower interest rate than the rate on U.S.Treasuries.