Which of the Following Statements Is False

question 92

Multiple Choice

Which of the following statements is false?

• A) Investors pay less for bonds with credit risk than they would for an otherwise identical default-free bond.
• B) The yield to maturity of a defaultable bond is equal to the expected return of investing in the bond.
• C) The risk of default, which is known as the credit risk of the bond, means that the bond's cash flows are not known with certainty.
• D) For corporate bonds, the issuer may default-that is, it might not pay back the full amount promised in the bond certificate.

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Definitions:

Proximity

The physical or psychological closeness between people, objects, or ideas, which can influence their interaction and relationship.

Grouping

The cognitive process of organizing objects or thoughts into groups based on common attributes, which is fundamental to perception and pattern recognition.

Perceptual Organization

The process by which the brain structures and interprets sensory information to represent the environment.

Openness

A personality trait that features characteristics such as imagination and insight, and those high in this trait also tend to have a broad range of interests.