Which of the Following Statements Is False

question 140

Multiple Choice

Which of the following statements is false?

• A) If the rate of inflation is expected to decline by a small amount, there could still be an upward-sloping term structure.
• B) A bond's yield is typically calculated assuming that all of the promised coupon and principal payments will be made.
• C) Investors demand extra yield for non-taxable bonds as compensation for the unfavourable tax treatment.
• D) The compensation investors demand for bearing interest rate risk adds an upward slope to the term structure of interest rates.
• E) The compensation investors demand for buying bonds that don't trade very often is called a liquidity premium.

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