Which of the Following Statements Is FALSE

question 105

Multiple Choice

Which of the following statements is FALSE?

• A)Forward rates tend not to be good predictors of future spot rates.
• B)Given the risk associated with interest rate changes,corporate managers require tools to help manage this risk.
• C)One of the most important tools to manage the risk of interest rate changes are interest rate forward contracts.
• D)A spot rate is an interest rate that we can guarantee today for a loan or investment that will occur in the future.

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Definitions:

Investing Decisions

Choices made by individuals or companies regarding where to allocate resources, often considering the potential for profits or losses, to achieve financial growth.

Investment Center

A business unit within an organization that is responsible for its own revenue, expenses, and investments, and is evaluated based on its return on investment.

Profit Center

A separate business unit or department within an organization that is responsible for generating its own revenue and profits.

Direct Expenses

Expenses that can be directly attributed to the production of specific goods or services, such as raw materials and labor costs.