Which of the Following Statements Regarding Bond Call Provisions Is

question 22

Multiple Choice

Which of the following statements regarding bond call provisions is FALSE?

• A)When bond yields have increased,by exercising the call on the callable bond and then immediately refinancing,the issuer can lower its borrowing costs.
• B)To understand how call provisions affect the price of a bond,we first need to consider when an issuer will exercise its right to call the bond.
• C)If the call provision offers a cheaper way to retire the bonds,the issuer will forgo the option of purchasing the bonds in the open market and call the bonds instead.
• D)An issuer can always retire one of its bonds early by repurchasing the bond in the open market.

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