6. Which of the following is TRUE? a. A bond's price moves to par value as it approaches maturity b. The shorter a bond has to maturity, the less sensitive the bond's price is to changes in market nterest rates c. The longer a bond has to maturity, the more sensitive the bond's price is to changes in market nterest rates d. Both b &c e. All of the above 7. Once a bond has been issued, if the holder of the bond retains it until maturity: a. the market value of the bond may change, but the cash flows will not. b. the cash flows associated with the bond may change, but the market value will not. c. both the market value of the bond and the cash flows may change d. neither the market value of the bond or the cash flows will change 8. Which of the following is most correct? a. When coupon rates exceed market rates, bonds will sell at a premium. b. When market rates exceed coupon rates, bonds will sell at a premium. c. When coupon rates exceed market rates, bonds could sell at either a premium or a discount. d. Bonds will always sell at par when the coupon rate equals the market rate e. Both a. and d. are correct. 9. Maturity risk exists because the prices of longer-term bonds fluctuate more in response to a. government policy changes. b. company policy changes. c. industry changes d. interest rate changes. 10. Call provisions usually arise when the issuing company wants the option to a. retire the bonds earlier than planned because it has more capital than it needs. b. require the retirement of bonds if market interest rates rise substantially above the coupon rate c. retire high interest rate bonds replacing them with lower cost debt when interest rates drop d. refund their debt because interest rates are escalating