A Bond Is Most Likely to Be Called

question 25

Multiple Choice

A bond is most likely to be called

• A) when investors can reinvest at higher rates.
• B) when the bond sells at a large discount.
• C) when market yields are close to coupon rates.
• D) when investors must reinvest at lower rates.

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Definitions:

Equity

The residual interest or ownership rights in the assets of a company after deducting its liabilities, often reflected as shareholders' equity.

Assets

Economic resources owned or controlled by a business or individual that are expected to provide future benefits.

Liabilities

Financial obligations or debts owed by a business to external parties or entities.

Retained Earnings

The portion of net earnings kept by the company instead of being paid out to its shareholders in the form of dividends.