Which of the Following Statements Regarding Bonds and Their Terms

question 10

Multiple Choice

Which of the following statements regarding bonds and their terms is FALSE?

• A) The internal rate of return (IR
• R) of an investment in a zero-coupon bond is the rate of return that investors will earn on their money if they buy a default-free bond at its current price and hold it to maturity.
• B) The yield to maturity of a bond is the discount rate that sets the future value (F
• V) of the promised bond payments equal to the current market price of the bond.
• C) Financial professionals also use the term spot interest rates to refer to the default-free zero-coupon yields.
• D) When we calculate a bond's yield to maturity by solving the formula, Price of an n-period bond = + + ... + , The yield we compute will be a rate per coupon interval.

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Definitions:

Rhinoscopy

The examination of the nasal passages and the interior of the nose using a rhinoscope.

Nasal Passages

The channels in the nose through which air enters the body and is warmed and humidified before reaching the lungs.

Olfaction

The sense of smell or the act of smelling.

Smelling

The ability to perceive odors or scents through the olfactory system.