Which of the Following Statements Is False

Multiple Choice

Which of the following statements is false?

A) If the rate of inflation is expected to decline by a small amount, there could still be an upward-sloping term structure.
B) A bond's yield is typically calculated assuming that all of the promised coupon and principal payments will be made.
C) Investors demand extra yield for non-taxable bonds as compensation for the unfavourable tax treatment.
D) The compensation investors demand for bearing interest rate risk adds an upward slope to the term structure of interest rates.
E) The compensation investors demand for buying bonds that don't trade very often is called a liquidity premium.