Everything else being equal,a ________ bond's price will ________ as the bond approaches maturity.

Question

Quizplus · Accepted Answer

A bond trading at a discount sells for less than its face value. At maturity, the bondholder is entitled to the full face value.
Therefore, as the bond approaches maturity the price will rise until it is finally equal to the bond's face value on the maturity date.
This increase in price provides the bondholder with the capital gain yield necessary to make up for the bond's insufficient coupon yield. Recall that the bond was originally trading at a discount because its coupon rate was lower than the yields of bonds of similar risk.

Everything Else Being Equal,a ________ Bond's Price Will ________ as the Bond

Everything Else Being Equal,a Bond's Price Will as the Bond