Which of the following statements is false?   A.   Banks have high levels of liquidity assets and stable funding since the financial crisis.   B.   Compared with bonds with short-term duration, bonds with long-term duration have uncertainty regarding future creditworthiness.   C.   Expected loss can decrease with an increase in a bond’s recovery rat

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 2Q: Short-term interest rates are more volatile than long-term interest rates, so short-term bond prices...
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Which of the following statements is false?

 

A.

 

Banks have high levels of liquidity assets and stable funding since the financial crisis.

 

B.

 

Compared with bonds with short-term duration, bonds with long-term duration have uncertainty regarding future creditworthiness.

 

C.

 

Expected loss can decrease with an increase in a bond’s recovery rate.

 

D.

 

Macaulay duration is calculated as modified duration divided by one plus the bond’s yield to maturity.

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