Which of the Following Statements Is FALSE

question 17

Multiple Choice

Which of the following statements is FALSE?

• A)Bond ratings encourage widespread investor participation and relatively liquid markets.
• B)Bonds in the top four categories are often referred to as investment grade bonds.
• C)A bond's rating depends on the risk of bankruptcy as well as the bondholder's ability to lay claim to the firm's assets in the event of a bankruptcy.
• D)Debt issues with a low-priority claim in bankruptcy will have a better rating than issues from the same company that have a higher priority in bankruptcy.

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Definitions:

Variable Costs

Costs that change in proportion to the level of activity or volume of production.

Break-even Point

The point of business operation at which revenues equal expenses, resulting in no net loss or gain.

Variable Costs

Expenses that change in direct proportion to the amount of production or the volume of sales.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance expenses.