Final answer:
The market value of a bond is indeed based on the market yield-to-maturity, which includes consideration of the issuer's credit risk, making the statement true.
Step-by-step explanation:
The statement that the market value of a bond is based on the market yield-to-maturity which reflects the credit risk of the issuer of the bond is true. The yield-to-maturity is a critical component in determining a bond's market value because it incorporates both the bond's coupon payments and the capital gains or losses that the investor will realize if the bond is held to maturity. The credit risk, or the risk that the borrower might default on the payments, is part of the calculation of yield-to-maturity, as investors will demand a higher yield for bonds issued by entities with higher credit risk. Additionally, it's important to know that the interest rate printed on a bond, especially on older bonds in the secondary market, often differs from the bond yield because market interest rates can fluctuate, and hence the price of a bond adjusts to reflect the current yield-to-maturity expected by investors in the market.