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.

Question

Quizplus · Accepted Answer

The statement that the highest interest rate, for a given horizon, is the rate paid on U.S. Treasury securities is false. While U.S. Treasury securities are seen as a safe investment, there may be other investments that offer higher returns for the same horizon and similar risk level.

Which of the Following Statements Is False