Which of the Following Statements Is FALSE

question 38

Multiple Choice

Which of the following statements is FALSE?

• A)We can use the law of one price to compute the price of a coupon bond from the prices of zero-coupon bonds.
• B)The plot of the yields of coupon bonds of different maturities is called the coupon-paying yield curve.
• C)It is possible to replicate the cash flows of a coupon bond using zero-coupon bonds.
• D)Because the coupon bond provides cash flows at different points in time,the yield to maturity of a coupon bond is the simple average of the yields of the zero-coupon bonds of equal and shorter maturities.

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Definitions:

Death Benefit

A sum of money paid by an insurance policy or retirement plan to the beneficiary upon the death of the insured person or plan holder.

Losses

The negative financial impact that occurs when expenses exceed revenues, or due to unforeseen events or damages.

Mutual Mistake

An error shared by all parties in a contract, leading to a misunderstanding regarding a fundamental fact or element of the agreement.

Fraud

Deliberate deception or misrepresentation intended to result in an unfair or unlawful gain.