The Call Feature Is Usually Advantageous to the Bondholder

question 70

True/False

The call feature is usually advantageous to the bondholder.
The call feature allows the issuer greater control over when to prepay and retire bonds. The ability to control holding the bond for longer periods up to maturity is removed from the bondholders, placing them at a disadvantage.

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Definitions:

Probability Density Function

An equation that indicates the probability of a random variable occurring at a certain value.

Interval

In mathematics, this refers to a range of numbers between two defined points, which can be either open or closed at each end.

Exponential Distribution

A probability distribution used to model the time between events in a Poisson process, describing the times between events in a continuous but rare occurrence.

Poisson Probability

The probability of a given number of events happening in a fixed interval of time or space if these events occur with a known constant mean rate and independently of the time since the last event.