Why Do Bond Prices Increase as the Next Coupon Payment

question 32

Essay

Why do bond prices increase as the next coupon payment gets closer?

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Definitions:

Reconstructive Process

The way memory is modified during recall, influenced by current knowledge, experiences, and expectations, rather than being a perfect replay of events.

Biased By Schemas

Involves shaping perceptions or understandings based on pre-existing cognitive frameworks, which can lead to skewed interpretations.

Ease Of Retrieval

The degree to which information can be easily and quickly accessed from memory, often influencing judgments and decisions.

Mood-Congruent Memory

The phenomenon where individuals are more likely to recall memories that are congruent with their current mood, affecting how memories are encoded, stored, and retrieved.