Which of the Following Statements Is False

question 22

Multiple Choice

Which of the following statements is false?

• A) The holder of a callable bond faces reinvestment risk precisely when it hurts: when market rates are lower than the coupon rate she is currently receiving.
• B) When yields have risen, the issuer will not choose to exercise the call on the callable bond.
• C) The issuer will exercise the call option only when the prevailing market rate exceeds the coupon rate of the bond.
• D) A callable bond is relatively less attractive to the bondholder than the identical non-callable bond.

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Definitions:

Egas Moniz

A Portuguese neurologist best known for pioneering the development of cerebral angiography and the controversial prefrontal leucotomy.

Anxiety Disorder

A disorder that includes a number of conditions in which unhelpful anxiety has a negative effect on daily life.

Phobias

Intense, irrational fears of specific objects or situations, which can trigger severe anxiety and avoidance behavior disproportionate to the actual threat posed.

Generalized Anxiety Disorder

Persistently high levels of anxiety often accompanied by maladaptive behaviors to reduce anxiety; thought to be caused by chronic stress.