Which of the Following Statements Is False

question 66

Multiple Choice

Which of the following statements is false?

• A) Canadian T-Bill securities are widely regarded to be risk-free because there is virtually no chance the government will default on these bonds.
• B) In general, if the interest rate is r and the tax rate is τ, then for each $1 invested you will earn interest equal to r and owe taxes of τ × r on the interest.
• C) Investors may receive less than the stated interest rate if the borrowing company has financial difficulties and is unable to fully repay the loan.
• D) Taxes reduce the amount of interest the investor can keep, and we refer to this reduced amount as the tax effective interest rate.

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Definitions:

Horizontal Merger

A business consolidation that occurs between firms which operate in the same industry, often leading to a higher market concentration.

Vertical Merger

A merger between two companies operating at different levels within an industry's supply chain.

Tying Contract

An agreement where the sale of one product (the tying product) is conditional on the purchase of another product (the tied product).

Clayton Act

A U.S. antitrust law enacted in 1914 aimed at promoting competition among businesses by prohibiting certain types of conduct that would lead to anti-competitive practices.