Which of the Following Statements Is FALSE

question 74

Multiple Choice

Which of the following statements is FALSE?

• A)Because the cash flows promised by the bond are the most that bondholders can hope to receive,the cash flows that a purchaser of a bond with credit risk expects to receive may be less than that amount.
• B)By consulting bond ratings,investors can assess the credit-worthiness of a particular bond issue.
• C)Because the yield to maturity for a bond is calculated using the promised cash flows,the yield of bonds with credit risk will be lower than that of otherwise identical default-free bonds.
• D)A higher yield to maturity does not necessarily imply that a bond's expected return is higher.

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Definitions:

Zero Inventories

A business strategy aimed at minimizing holding inventory to reduce storage costs and waste, often relying on just-in-time production methods.

Labour Costs

Expenses incurred by a company for the salaries, wages, and other benefits provided to its employees.

Upstream/Downstream

Terms used to describe stages in a production or supply chain process; "upstream" involves raw material extraction or production, while "downstream" refers to the processing, distribution, and selling of finished products.

Direct/Indirect

Terms used to classify costs or activities based on their relationship to a cost object, with direct costs being easily traceable and indirect costs not directly linked.