Which One of the Following Statements Is Correct Concerning a Callable

question 80

Multiple Choice

Which one of the following statements is correct concerning a callable bond that is currently selling below face value? Assume there is no risk of default. Also assume the issuer only calls bonds when they can be refinanced at a lower rate of interest.

• A)The bond will most likely be called while the bonds are selling at a discount.
• B)The yield to maturity is presently more relevant to an investor than the yield to call.
• C)The bond is likely going to be called due to the low current interest rates.
• D)The bond is currently paying a premium.
• E)The bond issue will most likely be replaced with a new bond issue.

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Definitions:

1920s

The decade spanning from 1920 to 1929, characterized by significant social, economic, and cultural changes following World War I.

Punishment

A stimulus or event that decreases the likelihood of the behavior that it follows occurring again in the future.

Negative Reinforcers

Stimuli whose removal following a behavior increases the likelihood of that behavior being repeated in the future.

Spontaneous Recovery

The reappearance of a previously extinguished response after a period without exposure to the conditioned stimulus.