Which of the Following Statements Is False

question 55

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:

Lend

To provide money or resources to another party with the expectation of future repayment.

Borrow

The act of receiving something with the intent to return it, often referring to money in the context of loans where interest may be charged.

Standard Deviations

A statistic that measures the dispersion of a dataset relative to its mean, used to quantify the amount of variation or spread of a set of data values.