Juan Recently Invested in 15-Year Bellandro Bay Brewery Bonds Paying

question 309

Multiple Choice

Juan recently invested in 15-year Bellandro Bay Brewery bonds paying 6% interest annually,with a maturity date of 2020.The bonds are callable in 2015.If interest rates go down to 4.5% in the year 2015,the brewery is likely to:

• A)Not exercise the call.
• B)Exercise the call.
• C)Give bondholders a choice of whether they want to turn the bonds back to the brewery.
• D)Decrease the interest rate that they are willing to pay the holder.

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Definitions:

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A theory that explains how, over time, an idea or product gains momentum and spreads through a specific population or social system.

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An individual or entity that is slow to adopt new technologies, ideas, or practices, often trailing behind the majority in terms of innovation adoption.

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