A Coupon Bond Is a Bond That

question 7

Multiple Choice

A coupon bond is a bond that

• A)pays interest on a regular basis (typically every six months).
• B)does not pay interest on a regular basis but pays a lump sum at maturity.
• C)can always be converted into a specific number of shares of common stock in the issuing company.
• D)always sells at par value.

---

Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision.

Sunk Cost

A past expense that has already been incurred and cannot be recovered, which should not influence ongoing or future decisions.

Kahneman and Tversky

Psychologists known for their work on the psychology of judgment and decision-making, as well as behavioral economics.

Image Theory

A theory in decision-making research which suggests individuals make decisions based on their internal values (principles), plans (projects), and beliefs about potential outcomes (prospects).