Whenever the required return is different from the coupon interest rate, the amount of time to maturity affects the bond value, even if the required return remains constant until maturity.

Question

Quizplus · Accepted Answer

The amount of time to maturity affects the bond value because it affects the present value of the bond's future cash flows. As time passes, the remaining cash flows become more uncertain, which impacts the bond's perceived risk and therefore its value. Additionally, if the required return increases or decreases during the life of the bond, the bond's value will be impacted accordingly.

Whenever the Required Return Is Different from the Coupon Interest