Other Things Held Constant,if a Bond Indenture Contains a Call

question 102

Multiple Choice

Other things held constant,if a bond indenture contains a call provision,the yield to maturity that would exist without such a call provision will generally be ____ the YTM with it.

• A) Higher than
• B) Lower than
• C) The same as
• D) Either higher or lower,depending on the level of call premium,than
• E) Unrelated to

---

Definitions:

Variable Cost

Variable cost is the cost that changes in direct proportion to the volume of output or activity in production, services, or other cost-incurred activities.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a business.

Contribution Margin

The amount by which the unit selling price exceeds the unit variable cost.