Which of the Following Statements Is False

Which of the following statements is false?

A) Because the cash flows promised by the bond are the most that bondholders can hope to receive, the cash flows that a purchaser of a bond with credit risk expects to receive may be less than that amount.
B) By consulting bond ratings, investors can assess the credit-worthiness of a particular bond issue.
C) Because the yield to maturity for a bond is calculated using the promised cash flows, the yield of bonds with credit risk will be lower than that of otherwise identical default-free bonds.
D) A higher yield to maturity does not necessarily imply that a bond's expected return is higher.

Correct Answer:

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