Which of the Following Statements Is FALSE

question 30

Multiple Choice

Which of the following statements is FALSE?

• A)The actual return kept by an investor will depend on how the interest is taxed.
• B)The equivalent after-tax interest rate is r(1 - τ).
• C)The highest interest rate,for a given horizon,is the rate paid on U.S.Treasury securities.
• D)It is important to use a discount rate that matches both the horizon and the risk of the cash flows.

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Definitions:

Pure Capitalism

An economic system characterized by private ownership of the means of production, minimal government intervention, and the free market determining prices and distribution of goods.

Communism

A political and economic ideology advocating for a classless society in which the means of production are owned collectively.

Market Economy

An economic system where economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses with minimal government intervention.

Command System

A method of organizing an economy in which property resources are publicly owned and government uses central economic planning to direct and coordinate economic activities; socialism; communism. Compare with market system.