Which of the Following Statements Is FALSE

question 14

Multiple Choice

Which of the following statements is FALSE?

• A)The amount of each coupon payment is determined by the coupon rate of the bond.
• B)The simplest type of bond is a zero-coupon bond.
• C)Treasury bonds are Australian government bonds with a maturity greater than one year.
• D)Prior to its maturity date, the price of a zero-coupon bond is always greater than its face value.

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Definitions:

Expected Utility

A theory in economics that calculates the utility expected from a risky or uncertain choice, aiming to maximize satisfaction.

Risk-averse

A characteristic of individuals who prefer to avoid taking risks and are likely to choose options that minimize uncertainty.

Probability

The determination of the possibility that an event will happen, quantified between 0 and 1.

Expected Utility

A theory in economics that calculates the utility of an entity based on the probabilistic outcomes of its choices.