Which of the Following Statements Is FALSE

question 42

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) Credit spreads fluctuate as perceptions regarding the probability of default change.
• C) Credit spreads are high for bonds with high ratings.
• D) We refer to the difference between the yields of the corporate bonds and the Treasury yields as the default spread or credit spread.

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Definitions:

Stimuli

External or internal factors that elicit a response from a living organism or a system.

Reinforced

In behavioral psychology, reinforced refers to the process of strengthening a behavior by providing a consequence that increases the likelihood of the behavior's repetition.

Behaviorism

A theory of learning which states that all behaviors are acquired through conditioning, emphasizing the role of environmental factors.

Environmental Factors

Conditions and elements that exist outside the individual, influencing their behavior, development, and life processes.