Which of the Following Statements Regarding Bonds and Their Terms

question 31

Multiple Choice

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

• A) One advantage of quoting the yield to maturity rather than the price is that the yield is independent of the face value of the bond.
• B) Unlike the case of bonds that pay coupons, for zero-coupon bonds, there is no formula to solve for the yield to maturity.
• C) Because we can convert any bond price into a yield, and vice versa, bond prices and yields are often used interchangeably.
• D) The internal rate of return (IRR) of a bond is given a special name, the yield to maturity (YTM).

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Definitions:

Free-Rider Problem

A situation in which individuals receive benefits from a public good without contributing to its cost, leading to underprovision of those goods.

Selective Benefits

Selective benefits are advantages or perks provided exclusively to members of a group, organization, or society, rather than to the general public.

Collective Goods

Benefits or goods that are shared and cannot be denied to anyone within a community or society, such as clean air or public safety.

Membership Association

An organization founded and funded by members who share a common interest or goal, offering various benefits to members such as resources, networking opportunities, and advocacy.