The closer a bond comes to reaching its maturity date,________.

Question

Quizplus · Accepted Answer

As a bond approaches its maturity date, its price tends to move closer to its par value, regardless of the interest rate environment. This is because the bond will be redeemed at par value at maturity, making its current price converge towards that value as the maturity date nears. Changes in interest rates have a diminishing impact on the bond's price as it nears maturity, and while interest rates affect a bond's value, they don't necessarily align with it in the manner suggested by option B.

The Closer a Bond Comes to Reaching Its Maturity Date,________