When the Market Rate of Interest on Bonds Is Higher

question 55

Multiple Choice

When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at

• A) a premium
• B) their face value
• C) their maturity value
• D) a discount

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Definitions:

Rational Assessment

The evaluation of situations or solving problems based on logic and reasoning, often involving critical thinking and analysis.

Hyperopia

In marketing, refers to a consumer's tendency to prioritize long-term benefits over immediate gratification, opposite of myopia. In vision, it is farsightedness.

Habitual Decision Making

The process of making choices that are consistent and routine, often without much thought, typically based on past behaviors and patterns.

Sunk-Cost Fallacy

Misguided reasoning that further investment is warranted on something simply because the resources already invested will otherwise be lost, without regard for future costs and benefits.