Which of the Following Statements Is FALSE

question 65

Multiple Choice

Which of the following statements is FALSE?

• A)The yield curve changes over time.
• B)The formulas for computing present values of annuities and perpetuities cannot be used in situations in which cash flows need to be discounted at different rates.
• C)We can use the term structure to compute the present and future values of a risk-free cash flow over different investment horizons.
• D)The yield curve tends to be inverted as the economy comes out of a recession.

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Definitions:

Viscosity Grade

A classification indicating the thickness or fluidity of a lubricant, with higher numbers denoting thicker oils.

SAE 20

A classification of motor oil viscosity defined by the Society of Automotive Engineers, suitable for use in certain engine types under specific conditions.

Incremental Cash Flows

The additional cash flow a new project is expected to generate.