Which One of the Following Is Not True

question 69

Multiple Choice

Which one of the following is not true?

• A)Inflation does not affect the interest rates of bonds.
• B)A bond issuer's rating is affected by its default risk.
• C)An investor holding the bond until maturity expects to receive its par value.
• D)Rating agencies use financial statements to assess the default probability of firms.

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Definitions:

Profit-Maximizing

This is the process by which a firm decides on the price and output level that returns the maximum profit.

Short-Run Monopoly

A situation where one company dominates the market for a certain product or service temporarily, often before new entrants arrive.

Short Run

A time period in which at least one input, typically capital, is fixed, affecting the firm's capacity to adjust to changes in demand or production.

Producing

The act of creating, manufacturing, or otherwise bringing into existence goods or services to be offered for consumption or use by others.