Which of the Following Statements Is False

question 32

Multiple Choice

Which of the following statements is false?

• A) We can measure a firm's sensitivity to interest rates by computing the duration of its balance sheet.
• B) Just as the interest rate sensitivity of a single cash flow increases with its maturity, the interest rate sensitivity of a stream of cash flows increases with its duration.
• C) By restructuring the balance sheet to increase its duration, we can hedge the firm's interest rate risk.
• D) A firm's market capitalization is determined by the difference in the market value of its assets and its liabilities.