Which of the Following Is Not True Regarding Bonds

question 71

Multiple Choice

Which of the following is not true regarding bonds?

• A) Both principal and interest are paid to the investor
• B) Bondholders are owners of the borrowing firm
• C) Buying a bond means lending money
• D) All of the above

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Definitions:

Variances of Returns

The measure of the spread between numbers in a data set, representing the average of the squared differences from the mean, specifically used in the context of the returns on investments.

Single-Index Model

A simplified model that explains a security's return with its sensitivity to a single market index.

Alpha

A measure of the active return on an investment, indicating the performance of that investment compared to a benchmark index.

Single-Index Structure

An investment model that relates the returns on a stock to the returns on a common market index using a linear relationship.