Which of the Following Statements Is False

question 62

Multiple Choice

Which of the following statements is false?

• A) When a bond is trading at a discount, the price drop when a coupon is paid will be larger than the price increase between coupons, so the bond's discount will tend to decline as time passes.
• B) When a bond trades at a price equal to its face value, it is said to trade at par.
• C) As interest rates and bond yields rise, bond prices will fall.
• D) Ultimately, the prices of all bonds approach the bond's face value when the bonds mature and their last coupons are paid.

Recognize the structure of hypothetical and disjunctive syllogisms.

Distinguish between true premises and conclusions within deductive arguments.

Understand the characteristics of sound arguments.

Identify universal propositions within arguments.

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Definitions:

Herfindahl Index

A measure of market concentration used to evaluate the level of competition within an industry, calculated by summing the squares of the market shares of all firms in the industry.

Four-Firm Concentration Ratio

A measure of market concentration that indicates the combined market share of the four largest firms in an industry.

Productive Efficiency

A situation where a good or service is produced at the lowest possible cost.

Allocative Efficiency

A state of the economy in which resources are allocated in a way that maximizes the total benefit to society.