When the Required Return Is Constant but Different from the Coupon

question 3

Multiple Choice

When the required return is constant but different from the coupon rate, the price of a bond as it approaches its maturity date will ________.

• A) remain constant
• B) increase
• C) decrease
• D) approach par

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Definitions:

Physical Dependence

A physiological state of adaptation to a substance, leading to withdrawal symptoms upon cessation of its use.

Psychoactive Drug

A chemical substance that affects the central nervous system and alters brain function, resulting in temporary changes in perception, mood, consciousness, and behavior.

Compound Drug

A medication that is made by combining two or more active pharmaceutical ingredients.

Hallucinogens

Substances that induce alterations in perception, mood, and thought, often causing visual or auditory hallucinations.