Which of the Following Statements Is Incorrect

question 65

Multiple Choice

Which of the following statements is incorrect?

• A) Interest rates and bond prices move inversely with each other.
• B) Corporate bonds have no interest rate risk in the long run.
• C) Arbitrage keeps interest rates on equally risky assets the same.
• D) A longer term to maturity exposes a bond holder to greater interest rate risk.

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Definitions:

Evaluates

The process of assessing or determining the value, significance, or condition of something, often for the purpose of making decisions or drawing conclusions.

Escalation of Commitment

Is a pattern of behavior in which an individual or group continues to invest in a decision despite evidence of its ineffectiveness or the likelihood of negative outcomes.

Perceptual Defense

The psychological mechanism by which individuals protect themselves from information or stimuli perceived as threatening.

Decision Maker

An individual or group responsible for making choices that will impact the organization.