If the Coupon Rate ____ the Required Rate of Return

question 17

Multiple Choice

If the coupon rate ____ the required rate of return, the price of a bond ____ par value.

• A) equals; equals
• B) exceeds; is less than
• C) is less than; is greater than
• D) B and C
• E) none of the above

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Definitions:

Cognitive Dissonance

The psychological discomfort experienced when holding two or more conflicting cognitions, such as beliefs, attitudes, or behaviors.

Dissonance Reduction

The process of rationalizing or justifying conflicting thoughts, beliefs, or attitudes to reduce psychological discomfort.

Theory of Planned Behavior

A psychological theory which states that an individual's behavior is determined by their intention to perform the behavior, which in turn is influenced by their attitudes, subjective norms, and perceived behavioral control.

Subjective Norm

An individual's perception of social pressure to perform or not perform a particular behavior, influenced by the beliefs about what important others think they should do.