Which of the Following Statements Is FALSE

question 64

Multiple Choice

Which of the following statements is FALSE?

• A)Interest rates we observe in the market will vary based on quoting conventions, the term of investment, and risk.
• B)The opportunity cost of capital is the return the investor forgoes when the investor takes on a new investment.
• C)For a risk-free project, the opportunity cost of capital will typically be greater than the interest rate on Australian government securities with a similar term.
• D)The investor's opportunity cost of capital is the best available expected return offered in the market on an investment of comparable risk and term of the cash flows being discounted.

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Definitions:

Liquidation

The process of closing a business and distributing its assets to claimants, often done when a company is insolvent.

Going Out Of Business

The process of closing a company permanently, often involving selling off assets and paying off creditors.

Revaluation Of Land

The process of adjusting the book value of land to reflect its current market value, often leading to an increase in assets on the balance sheet.

Ownership Equity

The residual interest in the assets of the enterprise after deducting liabilities, representing owners' share in the company.