Which of the Following Statements Is FALSE

question 9

Multiple Choice

Which of the following statements is FALSE?

• A)The IRR of an investment in a zero-coupon bond is the rate of return that investors will earn on their money if they buy a default-free bond at its current price and hold it to maturity.
• B)The yield to maturity of a bond is the discount rate that sets the future value of the promised bond payments equal to the current market price of the bond.
• C)Financial professionals also use the term spot interest rates to refer to the default-free zero-coupon yields.
• D)When we calculate a bond's yield to maturity by solving the formula,Price of an n-period bond = + + ...+ ,the yield we compute will be a rate per coupon interval.

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Definitions:

Market

A place or system where buyers and sellers interact to trade goods, services, or financial instruments.

Expected Return

The anticipated amount of profit or loss an investment is likely to generate over a specific period.

Stock X

An online marketplace and clothing reseller, primarily of sneakers and streetwear.

Stock Y

A placeholder name for a specific stock not defined here; could be used to discuss hypothetical scenarios in finance.