When Would It Make Sense for a Firm to Call

question 72

Multiple Choice

When would it make sense for a firm to call a bond issue and refinance?

• A) when the market price of the bond is less than the call price, and market interest rates are greater than the bond's coupon rate
• B) when the market price of the bond exceeds the call price, and market interest rates are less than the bond's coupon rate
• C) when the market price of the bond exceeds the call price, and market interest rates are greater than the bond's coupon rate
• D) when the market price of the bond is less than the call price, and market interest rates are less than the bond's coupon rate

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Definitions:

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without prior learning.

Primary Stimulus

The initial or main source of stimulation that elicits a response in sensory, behavioral, or cognitive processes.

Secondary Stimulus

A stimulus that acquires the capacity to evoke a conditioned response after being paired with a primary stimulus.

Acquisition

The process of learning or obtaining new information, skills, or responses, as in the initial stage of conditioning in psychology.