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:

Alarm-Calling

Vocal signals emitted by some animals to warn conspecifics of potential predators, enhancing group survival but potentially increasing risk to the caller.

Hamilton's Rule

A principle of kin selection that predicts when natural selection will favor altruistic acts among related individuals, based on the cost to the altruist, the benefit to the recipient, and the degree of relatedness.

Adaptive

Relating to or characterized by adaptation; capable of adjusting to new conditions for survival advantage.

Alarm-Calling

A behavior in animals where individuals produce vocalizations to warn conspecifics of potential danger.