Question

Which of the following statements is​ FALSE?

Answer 1

Answer:

The correct answer is letter "B": To compensate for the risk that they will receive less than promised if the firm​ defaults, investors demand a lower interest rate than the rate on U.S. Treasuries.

Explanation:

U.S. Treasuries are marketable securities issued by the U.S. government and available in increments of $100 per year. The U.S. treasuries have a maturity range of 10 to 30 years with the most common being 30 years. Interest is paid every six (6) months and is tax-free at the state level, but federally taxable.

Investors ask for a higher interest rate compared to the rate on U.S. treasuries to balance the risk of their investment in case firms face economical issues.