When the Required Return Is Different from the Coupon Interest

question 61

True/False

When the required return is different from the coupon interest rate and is assumed to be constant until maturity, the value of the bond will approach its par value as the passage of time moves the bond's value closer to maturity.

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Definitions:

Fossils

The preserved remains or traces of animals, plants, and other organisms from the remote past.

Hypothetical Syllogism

A logical argument composed of three categorical propositions, two premises followed by a conclusion, where if the first proposition (if A, then B) and the second proposition (if B, then C) are true, then the conclusion (if A, then C) necessarily follows.

Modus Ponens

A form of deductive reasoning where, from premises in the form "If P, then Q" and "P", one concludes "Q".

Modus Tollens

A logical argument form that infers the denial of an antecedent from the denial of the consequent in a conditional statement.