Which One of the Following Statements About Bonds Is NOT

question 4

Multiple Choice

Which one of the following statements about bonds is NOT true?

• A) To compute a bond's price, one needs to calculate the present value of the bond's expected cash flows.
• B) The value, or price, of any asset is the future value of its cash flows.
• C) The required rate of return, or discount rate, for a bond is the market interest rate called the bond's yield to maturity
• D) The expected future cash flows are estimated using the coupons that the bond will pay and the maturity value to be received.

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Definitions:

Quantity Supplied

The volume of goods or services that manufacturers are ready and capable of selling at a certain price during a particular period.

Perfectly Inelastic

A situation in demand where the quantity demanded does not change regardless of the price level.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, clearing the market.

Coefficient

A numerical or constant factor in a mathematical expression that multiplies the variable it is associated with.