Which of the following statements is most correct?

Question

Quizplus · Accepted Answer

A) is correct because as a bond nears its maturity, its price tends to move closer to its par value, reflecting the decreasing impact of interest rate changes over time. C) is also correct because a bond's price is influenced by both the issuer's creditworthiness, which affects the perceived risk of default, and the prevailing interest rates, which affect the relative attractiveness of the bond's fixed payments. B) is incorrect because if inflation is expected to increase, interest rates are likely to rise to combat inflation, which would decrease bond prices since bond prices move inversely to interest rates.

Which of the Following Statements Is Most Correct