If All Other Variables Remain Constant, Then an Increase in the Coupon

question 27

Multiple Choice

If all other variables remain constant, then an increase in the coupon rate will cause which of the following to also increase?
I. face value
II. market value
III. yield to maturity
IV. current yield

• A)I and II only
• B)III and IV only
• C)I, II, and III only
• D)II, III, and IV only
• E)I, II, III, and IV

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Definitions:

Bias

A tendency to lean in a certain direction, often unfairly, in thought or decision, usually leading to a prejudiced outcome.

Halo Effect

A cognitive bias where an impression created in one area influences opinion in another area.

Similar-to-me Effect

The tendency to prefer individuals who are perceived to be similar to oneself in terms of attitudes, beliefs, and backgrounds.

Attribution/covariation Model

A psychological theory that explains how individuals infer the causes of their own and others' behavior by observing patterns of covariation.