Which of the Following Statements Is False

question 100

Multiple Choice

Which of the following statements is false?

• A) The IRR of an investment in a zero-coupon bond is the rate of return that investors will earn on their money if they buy a default-free bond at its current price and hold it to maturity.
• B) The yield to maturity of a bond is the discount rate that sets the future value of the promised bond payments equal to the current market price of the bond.
• C) Financial professionals also use the term spot interest rates to refer to the default-free zero-coupon yields.
• D) When we calculate a bond's yield to maturity by solving the formula, Price of an n-period bond = + + ... + , the yield we compute will be a rate per coupon interval.

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Definitions:

Perfectly Competitive

A market structure where many firms sell identical products, entry and exit are easy, and no single seller can influence the market price.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a good or service.

Total Revenue

The total amount of income generated by the sale of goods or services before any expenses are subtracted.

Nash Equilibrium

A situation in game theory where each player’s strategy is optimal given the strategies of all other players, resulting in a stable outcome.