Which of the Following Statements Is FALSE

question 26

Multiple Choice

Which of the following statements is FALSE?

• A)When we refer to the "risk-free interest rate," we mean the rate on U.S.Treasuries.
• B)Interest rates vary with the investment horizon.
• C)All borrowers,besides the U.S.Treasury,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:

Preferred Dividends

Dividends that are paid out to preferred shareholders before any dividends are distributed to common shareholders, typically at a fixed rate.

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in cash.

State Corporation Laws

Regulations established by individual states governing the formation, operation, and dissolution of corporations within their jurisdiction.

Comprehensive Income Items

Components of comprehensive income that represent all changes in equity during a period except those resulting from investments by owners and distributions to owners.