Which of the Following Statements Is False

question 37

Multiple Choice

Which of the following statements is false?

• A) When we refer to the "risk-free interest rate," we mean the rate on Treasury Bills of the Government of Canada.
• B) Interest rates vary with the investment horizon.
• C) All borrowers, besides the the borrowers of the Treasury Bills of the Government of Canada, have some risk of default.
• D) When interest on a loan is tax deductible, the effective after-tax interest rate is τ × (1 - r).

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Definitions:

Special Journal

A financial journal designed for recording a specific type of transaction in a more efficient manner.

Accrual Basis

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when the cash transaction occurs.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid out, regardless of when the transactions occurred.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material, labor, and manufacturing overhead expenses.