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:

Board of Governors

An executive committee or oversight body responsible for setting policies and managing the affairs of an organization, such as a central bank or educational institution.

Bank Acts

Bank Acts are laws and regulations that govern the operations, establishment, and oversight of banks, aiming to ensure their stability and integrity.

Discount Rate

The interest rate the Fed charges banks that borrow reserves

Depository Institutions

Financial organizations, such as banks and credit unions, that accept deposits from individuals and provide loans and other financial services.