Which of the Following Statements Is False

question 32

Multiple Choice

Which of the following statements is false?

• A) We can measure a firm's sensitivity to interest rates by computing the duration of its balance sheet.
• B) Just as the interest rate sensitivity of a single cash flow increases with its maturity, the interest rate sensitivity of a stream of cash flows increases with its duration.
• C) By restructuring the balance sheet to increase its duration, we can hedge the firm's interest rate risk.
• D) A firm's market capitalization is determined by the difference in the market value of its assets and its liabilities.

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Definitions:

Civil Lawsuits

Legal disputes between individuals or entities over rights, obligations, or damages that do not involve criminal charges.

Res Ipsa Loquitur

Res ipsa loquitur is a legal doctrine that allows a presumption of negligence to be established based on the mere occurrence of certain types of accidents, without the need for direct evidence of a defendant's behavior.

Negligence Per Se

A legal doctrine where an act is considered negligent because it violates a statute or regulation, thereby causing harm to a person that the statute was designed to protect.

Assumption of Risk

A legal doctrine stating that an individual knowingly and voluntarily assumes the risk of an activity, thereby relieving another party from liability for harm caused during the activity.