Which Statement Is NOT True

question 271

Multiple Choice

Which statement is NOT true?

• A) The supply of loanable funds comes from saving.
• B) Saving behavior is a cultural phenomenon.
• C) The reward for not spending today is the interest received on saving.
• D) The supply of funds to the loanable funds market is inversely related to the interest rate.

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Definitions:

Discount Rate

This interest rate is used in the framework of discounted cash flow analysis to determine the present worth of cash flows anticipated in times ahead.

Simple Rate of Return

A financial metric that measures the efficiency of an investment as the annual income divided by the initial investment cost.

Time Value of Money

The principle that a sum of money is worth more now than the same sum in the future due to its potential earning capacity.

Payback Method

A method of investment appraisal that calculates the time required for the cash inflows from a project to repay its initial investment cost.