Which of the Following Statements Is FALSE

question 79

Multiple Choice

Which of the following statements is FALSE?

• A)The bond's expected return,which is equal to the firm's debt cost of capital,is less than the yield to maturity if there is a risk of default.
• B)The two best-known bond-rating companies are Standard & Poor's and Dow Jones.
• C)Bonds in the bottom five categories are often called speculative bonds,junk bonds,or high-yield bonds.
• D)Bond ratings encourage widespread investor participation and relatively liquid markets.

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Definitions:

Lifetime Consumption

Refers to the total amount of goods and services consumed by an individual over the entirety of their life.

Real Interest Rate

The interest rate that has been adjusted to remove the effects of inflation, reflecting the true cost of borrowing.

Brokerage Costs

Fees charged by a broker for executing transactions or providing specialized services.

Financial Intermediaries

Institutions that serve as middlemen between savers and borrowers, like banks, insurance companies, and investment firms, facilitating the flow of funds in the economy.