Which of the Following Statements About Zero Coupon Bonds Is

question 9

Multiple Choice

Which of the following statements about zero coupon bonds is FALSE?

• A)When the bonds mature,the issuing firm is faced with a small cash outflow relative to the cash inflow the firm receives when the bonds are initially issued.
• B)Zero coupon bonds are disadvantageous to the issuing firm if interest rates fall.
• C)Yields tend to be bid down on zero coupon bonds due to investor demand for the bonds.
• D)Zero coupon bonds provide a positive annual cash flow to the issuing firm over the life of the bonds.

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Definitions:

Dual-Process Approach

A theoretical model that suggests there are two distinct systems in the brain for processing information: one that is intuitive and automatic, and another that is deliberate and reasoning-based.

Biased Attitudes

These are prejudiced beliefs and feelings toward certain groups or individuals, often based on stereotypes and without factual justification.

Reflective Process

A cognitive mechanism by which individuals examine and analyze their own thoughts, feelings, and behaviors.

Controlling Biases

The practice of recognizing and attempting to minimize or eliminate biases in one's judgments and decisions.