Which of the Following Statements Is FALSE

question 77

Multiple Choice

Which of the following statements is FALSE?

• A)Investors pay less for bonds with credit risk than they would for otherwise identical default-free bonds.
• B)Credit spreads fluctuate as perceptions regarding the probability of default change.
• C)Credit spreads are high for bonds with high ratings.
• D)We refer to the difference between the yields of the corporate bonds and the Treasury yields as the default spread or credit spread.

---

Definitions:

Market Return

The total return from an investment market, including dividends, interest, and capital gains.

Growth Rate

The percentage increase in the size or value of something, such as a company's revenue or an economy's GDP, over a specified period.

Proxy Fights

Proxy fights occur during shareholders' meetings when opposing groups of shareholders solicit votes from other shareholders to win control over the company's board of directors.

Board of Directors

A group of elected or appointed members who jointly oversee the activities of a company or organization.