Which of the Following Statements Is FALSE

question 44

Multiple Choice

Which of the following statements is FALSE?

• A)An inverted yield curve generally signals an expected decline in future interest rates.
• B)An inverted yield curve is often interpreted as a positive forecast for economic growth.
• C)All the formulas for computing present values of annuities and perpetuities are based upon discounting all of the cash flows at the same rate.
• D)The rate of growth of your purchasing power is determined by the real interest rate.

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Definitions:

Extra Dividend

A one-time payment made by a company to its shareholders, in addition to regular dividends, usually indicative of exceptional earnings.

Special Dividend

A one-time distribution of profits by a company to its shareholders, in addition to any regular dividends.

WACC

The weighted average cost of a company's capital from all sources, including equity and debt, used to evaluate investment possibilities.

Debt Ratio

The debt ratio measures a company's financial leverage by comparing its total liabilities to its total assets, indicating the proportion of a company's assets that are financed through debt.