If Investors Are Willing to Pay More Than the Par

question 58

Multiple Choice

If investors are willing to pay more than the par value for a bond, you can be sure that

• A)the tax rate on the bond must be very low.
• B)the coupon rate on the bond must be higher than on other similar bonds.
• C)the coupon rate on the bond must be lower than on other similar bonds.
• D)the par value for the bond must be very low.

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Definitions:

Other-Race Effect

The tendency to more easily recognize faces of one's own race, compared to faces of other races, often attributed to social and cognitive factors.

Aggression

Behavior aimed at causing harm or pain to another being, which can be physical or verbal.

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, often known as the "I-knew-it-all-along" phenomenon.

Just-World Phenomenon

The Just-World Phenomenon is a cognitive bias wherein individuals believe that the world is inherently fair, leading them to rationalize others' suffering as deserved due to their actions.