Which of the Following Statements Is False

question 56

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.

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Definitions:

Excess

The amount by which something, such as inventory or revenue, exceeds what is normal, necessary, or specified, often indicating surplus or overproduction.

Cumulative Preferred Stock

Type of preferred stock where missed dividend payments accumulate and must be paid out before dividends can be distributed to common stockholders.

Dividends Per Share

The amount of declared dividends for every share of common stock issued.

Common Stock

Common stock represents units of ownership in a public corporation, giving holders voting rights and a share in the company's profits via dividends.