Which of the Following Statements Is FALSE

question 44

Multiple Choice

Which of the following statements is FALSE?

• A)The IRR 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 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:

Earmarks

Narrow, specially designated spending authorizations placed in broad legislation by senators and representatives for the purpose of providing benefits to firms and organizations within their constituencies. Earmarked projects are exempt from competitive bidding and normal evaluation procedures.

Public Subsidies

Financial support provided by the government to individuals, organizations, or industries to promote desired activities or reduce burden.

Special-Interest Effect

The impact of a small, focused group influencing policy for its own benefit, often at the broader public's expense.