Which of the Following Statements Is False

question 90

Multiple Choice

Which of the following statements is false?

• A) Because the cash flows promised by the bond are the most that bondholders can hope to receive, the cash flows that a purchaser of a bond with credit risk expects to receive may be less than that amount.
• B) By consulting bond ratings, investors can assess the credit-worthiness of a particular bond issue.
• C) Because the yield to maturity for a bond is calculated using the promised cash flows, the yield of bonds with credit risk will be lower than that of otherwise identical default-free bonds.
• D) A higher yield to maturity does not necessarily imply that a bond's expected return is higher.

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Definitions:

Regulatory

Pertaining to rules or directives made and maintained by an authority to regulate activities, often within specific industries.

Character and Skill

Attributes that define an individual’s moral qualities and abilities in performing tasks or professions.

Penalties

Fines or other forms of punishment imposed for violating a rule, law, or contract.

Noncompetition Clauses

Contractual agreements that restrict one party from engaging in similar business or trade in competition against another party.