Which of the Following Is False

question 8

Multiple Choice

Which of the following is false?

• A)Credit risk refers to the probability of a debtor not paying the principal or interest due on an outstanding debt.
• B)Since investors are risk averse, they must be offered the "bonus" of extra interest to accept more risk; the extra return or interest is called a liquidity premium, and its size increases with the riskiness of the borrower.
• C)Financial investors care about the after-tax return on their investments more than the pre-tax return.
• D)Since the interest earned on municipal securities is exempt from the federal income tax, the yields on municipal securities are typically well below the yields on other (taxable) securities with similar credit ratings and similar terms to maturity.

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Definitions:

Lumbar Plexus

A network of nerve fibers in the lumbar region of the body, providing sensation and movement.

Cervical Plexus

A network of nerves in the neck that supplies movement and sensation to the neck, upper shoulders, and part of the arms.

Patellar Reflex

A reflex action in which the patellar tendon is tapped, causing the quadriceps muscle to contract and kick the lower leg forward.

Rectus Femoris Muscle

A muscle of the anterior thigh that is part of the quadriceps group, involved in knee extension and hip flexion.