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.

---

Definitions:

Translation Loss

A decrease in the value of a company's assets or income due to changes in exchange rates when consolidating financial statements of subsidiaries in foreign currencies.

U.S. Dollars

The currency of the United States, widely used as a standard of exchange in international markets.

Free Trade

An economic policy where countries allow imports and exports with minimal governmental intervention, aiming to achieve economic growth through international trade.

Market Products

Goods, services, or securities offered for sale or trade in a particular market segment.