If an Investor Purchases a Bond When Its Current Yield

question 91

Multiple Choice

If an investor purchases a bond when its current yield is higher than the coupon rate,then the bond's price will be expected to:

• A) decline over time, reaching par value at maturity.
• B) increase over time, reaching par value at maturity.
• C) be less than the face value at maturity.
• D) exceed the face value at maturity.

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Definitions:

Group Disagreement

The occurrence of differing opinions, views, or decisions among members within a group.

Seeking Information

The act of looking for or attempting to acquire data and facts to increase knowledge or understanding.

Social-Comparison Explanation

A hypothesis positing that people assess their own value and societal position by comparing themselves to others.

Polarization in Groups

The process by which opinions within a group grow increasingly extreme, splitting the group into opposing sides.