Which of the Following Statements Is FALSE

question 6

Multiple Choice

Which of the following statements is FALSE?

• A)The assumption that underlies the yield calculation of a callable bond-that it will not be called-is not always realistic,so bond traders often quote the yield to call.
• B)The yield to call (YTC)is the annual yield of a callable bond assuming that the bond is called at the earliest opportunity.
• C)We can think of the yield to maturity of a callable bond as the interest rate the bondholder receives if the bond is not called and repaid in full.
• D)Because the price of a callable bond is higher than the price of an otherwise identical non-callable bond,the yield to maturity of a callable bond will be lower than the yield to maturity for its non-callable counterpart.

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