Which of the following statements is false?
A) When we refer to the "risk-free interest rate," we mean the rate on Treasury Bills of the Government of Canada.
B) Interest rates vary with the investment horizon.
C) All borrowers, besides the the borrowers of the Treasury Bills of the Government of Canada, have some risk of default.
D) When interest on a loan is tax deductible, the effective after-tax interest rate is τ × (1 - r).

Question

Quizplus · Accepted Answer

The correct formula for the effective after-tax interest rate is r × (1 - τ), where r is the interest rate and τ is the tax rate.

Which of the Following Statements Is False