Which of the Following Statements Is FALSE

question 30

Multiple Choice

Which of the following statements is FALSE?

• A)The actual return kept by an investor will depend on how the interest is taxed.
• B)The equivalent after-tax interest rate is r(1 - τ).
• C)The highest interest rate,for a given horizon,is the rate paid on U.S.Treasury securities.
• D)It is important to use a discount rate that matches both the horizon and the risk of the cash flows.

---

Definitions:

Limited Liability Company

A firm's structure that integrates the aspect of limited liability similar to a corporation with the pass-through tax benefit akin to that of a partnership or sole proprietorship.

Corporate Veil

A legal concept that separates the actions and liabilities of a corporation from its shareholders, protecting them from personal liability.

Syndicate

A group of individuals or firms that join together to finance a project; also called an investment group.

Corporation

A legal entity that is separate from its owners, offering limited liability to its shareholders, and able to own property, enter contracts, and sue or be sued.