Which of the Following Statements Is FALSE

question 45

Multiple Choice

Which of the following statements is FALSE?

• A)By convention,practitioners always plot the yield of the most senior issued bonds,termed the on-the-run-bonds.
• B)We can determine the no-arbitrage price of a coupon bond by discounting its cash flows using the zero-coupon yields.
• C)If the zero coupon yield curve is upward sloping,the resulting yield to maturity decreases with the coupon rate of the bond.
• D)The yield to maturity of a coupon bond is a weighted average of the yields on the zero-coupon bonds.

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Definitions:

Synthetic Lease

A financing method allowing a company to lease an asset while keeping it off its balance sheet, ensuring both tax advantages and off-balance-sheet financing.

Operating Lease

A contract that allows for the use of an asset but does not convey rights of ownership of the asset.

After-Tax Cost

The actual cost to a company or individual after considering the effects of taxes, often used in evaluating the cost of financing options.

Leasing Analysis

It is the examination of the financial aspects of leasing to determine whether leasing is a more viable option than purchasing.