Which of the Following Statements Regarding Callable Bonds Is FALSE

question 15

Multiple Choice

Which of the following statements regarding callable bonds is FALSE?

• A)Before the call date,investors anticipate the optimal strategy that the issuer will follow,and the bond price reflects this strategy.
• B)The yield to maturity of a callable bond is calculated as if the bond were called at the earliest opportunity.
• C)A callable bond will trade at a lower price (and therefore a higher yield)than an otherwise equivalent non-callable bond.
• D)The price of a callable bond can be low when yields are high,but does not rise above the call value when the yield is low.

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Definitions:

Trifluoperazine

A medication primarily used to treat schizophrenia and anxiety, functioning as an antipsychotic by blocking certain chemical pathways in the brain.

Disconnected Thoughts

A pattern of thinking where ideas are not logically connected, often seen in various psychiatric conditions.

Schizophrenia

A persistent neurological condition marked by altered cognition, feelings, speech, self-awareness, and actions.

Haloperidol

An antipsychotic medication used to treat disorders such as schizophrenia by altering the effects of chemicals in the brain.