When a Bond Is Called, the Old Issue Is Retired

question 3

Multiple Choice

When a bond is called, the old issue is retired and the bondholder receives ____.

• A) new, lower interest rate bonds
• B) new corporate stock
• C) a cash payoff
• D) treasury stock

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Definitions:

Slope

In mathematics, it is the measure of the steepness or incline of a line, defined as the ratio of the vertical change to the horizontal change between two points on the line.

Positive Economics

A branch of economics that focuses on objective analysis and the description of how the economy functions, as opposed to normative economics that involves value judgments.

Normative Economics

An area of economics that makes assessments of economic fairness or desired economic outcomes and aims of public policy.

Consequences

The outcomes or effects resulting from a particular action or set of conditions.