As bonds approach their maturity dates
A) premiums or discounts will increase.
B) the risk of a call will increase.
C) the bonds prices will become more sensitive to changes in interest rates.
D) prices will approach their par values.

Question

Quizplus · Accepted Answer

As bonds approach their maturity dates, their prices will converge towards their par values, regardless of whether they were initially sold at a premium or discount. This is because the bond's value will ultimately equal its face value when it matures and the principal is repaid.

As Bonds Approach Their Maturity Dates