Which of the Following Statements Is False

question 22

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 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:

Compromise Policy

A strategy aimed at finding a middle ground among different stakeholders' interests or policy alternatives.

Dividend Policy

A company's strategy or set of guidelines for distributing earnings to shareholders in the form of dividends.

Taxes

Taxes refer to the compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Transaction Costs

Expenses incurred when buying or selling a good or service, including broker's fees, taxes, or costs related to the time and labor involved in making the transaction.