Which of the Following Statements Is False

question 88

Multiple Choice

Which of the following statements is false?

• A) There are two potential sources of cash flows from owning a stock.
• B) An investor will be willing to pay a price today for a share of stock up to the point that this transaction has a zero NPV.
• C) An investor might generate cash by choosing to sell the shares at some future date.
• D) Because the cash flows from stock are known with certainty, we can discount them using the risk-free interest rate.

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Definitions:

Daily Balance

A method of calculating interest where the amount owed or due is recalculated each day, based on the balance of the account at the end of each day.

Borrowed

Refers to money or goods taken on loan with the obligation to return it or pay it back, usually with interest, within a specified period.

Amount Owed

The total sum of money that is due or required to be paid to another party.

Interest Rate

The fraction of a monetary sum levied for the privilege of utilizing it, often indicated as a percentage per annum.