The Principal on a Bond Is Generally Paid Back

question 41

Multiple Choice

The principal on a bond is generally paid back

• A) right away, before any interest has been paid.
• B) at the end of the term of the bond, after the interest has been paid.
• C) in small increments over the term of the bond, at the same time that any interest has been paid.
• D) never, because bonds offer only interest payments, not principal repayment.

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Definitions:

Self-Serving Bias

A common cognitive bias that causes individuals to see things in a way that favors themselves, often by attributing successes to personal skill and failures to external factors.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Control

In experiments, the standard to which comparisons are made by keeping all variables constant except the one being tested.

Biased

Showing an unfair preference or prejudice for or against something or someone.