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:

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.

Dissolves

To formally end or terminate something, such as a contractual agreement or a business entity like a corporation.

Corporation

A legal entity that is separate from its owners, with an independent existence that allows it to own property, enter contracts, and be liable for its actions.

General Partner

A member of a partnership who has unlimited liability and takes part in the daily operations of the business.