Which of the Following Statements Is FALSE

question 14

Multiple Choice

Which of the following statements is FALSE?

• A)In the case of a Treasury note or Treasury bond offering,the stop-out yield determines the coupon of the bond and then all bidders pay the discounted value for the bond or note.
• B)All competitive bidders submit sealed bids in terms of yields and the amount of bonds they are willing to purchase.
• C)In the past,the Treasury has issued bonds with maturities of 30 years (often called long bonds)and 20 years.
• D)Noncompetitive bidders (usually individuals)just submit the amount of bonds they wish to purchase and are guaranteed to have their orders filled at the auction.

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Definitions:

Market Price

The rate at present for the purchase or sale of a service or asset.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with dividends that are paid out before those to common shareholders.

Bonds Outstanding

The total amount of issued bonds that are currently held by investors and not yet redeemed.

Cost of Equity

The return that investors expect for investing in a company's equity, reflecting the compensation for the risk of investing.