Which of the Following Statements Is False

question 1

Multiple Choice

Which of the following statements is false?

• A) The difference between an annuity and a perpetuity is that an annuity ends after some fixed number of payments.
• B) Most car loans, mortgages, and some bonds are annuities.
• C) A growing perpetuity is a cash flow stream that occurs at regular intervals and grows at a constant rate forever.
• D) An annuity is a stream of N equal cash flows paid at irregular intervals.

---

Definitions:

Accounting

Process of measuring, interpreting, and communicating financial information to support internal and external business decision making.

Risk-Return Trade-Off

The principle that potential return rises with an increase in risk, describing the balance between the desire for the lowest possible risk and the highest possible returns.

Leverage

The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.

Hedge Fund Advantage

A benefit unique to hedge funds, often referring to their ability to employ diverse and complex strategies to achieve higher returns compared to traditional investment vehicles.