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:

Investment Opportunity

An asset or item that presents a potential for profitable returns, as in interest, income, or appreciation in value.

Margin

The difference between the selling price of a product and its cost of production, often expressed as a percentage of sales.

Operating Data

Information related to the daily operations of a business, which can include sales figures, production costs, and inventory levels.

Margin

The difference between the selling price of a product and its cost, expressed as a percentage of the selling price, indicating the profitability of the product.