When the Required Return Is Constant and Equal to the Coupon

question 68

Multiple Choice

When the required return is constant and equal to the coupon rate, the price of a bond as it approaches its maturity date will

• A) remain constant.
• B) increase.
• C) decrease.
• D) change depending on whether it is a discount or premium bond.

---

Definitions:

Actual Output

The real quantity of goods or services produced by a company, as opposed to estimated or planned production levels.

Standard Cost System

An accounting system that uses predetermined costs for products or services to facilitate variance analysis and budgeting.

Direct Labour Hours

Total hours accumulated by workers directly involved in the fabrication process.

Direct Materials Inventory

The total cost of raw materials that are directly involved in the manufacturing of a product and are currently held in inventory.