Which of the Following Statements Regarding Bonds and Their Terms

question 31

Multiple Choice

Which of the following statements regarding bonds and their terms is FALSE?

• A) One advantage of quoting the yield to maturity rather than the price is that the yield is independent of the face value of the bond.
• B) Unlike the case of bonds that pay coupons, for zero-coupon bonds, there is no formula to solve for the yield to maturity.
• C) Because we can convert any bond price into a yield, and vice versa, bond prices and yields are often used interchangeably.
• D) The internal rate of return (IRR) of a bond is given a special name, the yield to maturity (YTM).

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Definitions:

Wholly-Owned Subsidiary

A company whose entire stock is held by another company, making it fully controlled by the parent company.

City Ordinance

A rule or law enacted by a local government authority to regulate, permit, or prohibit certain activities within its jurisdiction.

Consecutive Sundays

Two or more Sundays that follow one directly after the other without interruption.

Investor Liability

Refers to the legal and financial responsibilities borne by investors, including potential losses or debts incurred from investments.