Which of the Following Statements Is NOT True

question 56

Multiple Choice

Which of the following statements is NOT true?

• A) The risk that the lender may not receive payments as promised is called default risk.
• B) Investors must pay a premium to purchase a security that exposes them to default risk.
• C) U.S. Treasury securities are the best proxy measure for the risk-free rate.
• D) All of the above are true statements.

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Definitions:

Present Value

The immediate value of a prospective sum of money or stream of cash flows, using a specific interest rate for calculation.

Equivalent

A term expressing a state of equality or equivalency in value, function, or meaning.

Cash Held

Physical money held by a business in its cash registers or cash box, used for daily operations.

Present Value

The present-day valuation of coming monetary sums or cash flow sequences, upon applying a defined rate of return.