If the maturity date of the bond is closer than the premium of bond will be ________?
Correct answer: A. relatively lower
- A. relatively lower
- B. relatively higher
- C. quantifiable
- D. not be quantifiable
Explanation
With other conditions unchanged, a bond's premium generally declines as its maturity approaches because there is less time for its above-market coupon advantage to continue. Thus, the premium becomes relatively lower.
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