Ranger Inc

question 6

Multiple Choice

Ranger Inc.would like to issue new 20-year bonds.Initially, the plan was to make the bonds non-callable.If the bonds were made callable after 5 years at a 5% call premium, how would this affect their required rate of return?

• A) There is no reason to expect a change in the required rate of return.
• B) The required rate of return would decline because the bond would then be less risky to a bondholder.
• C) The required rate of return would increase because the bond would then be more risky to a bondholder.
• D) It is impossible to say without more information.
• E) Because of the call premium, the required rate of return would decline.

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Definitions:

Rank-Order Consistency

The stability of individual differences within a population over time, particularly in terms of personality traits.

Identity Development

The process through which individuals form, repair, and maintain their personal identity over the course of their lives.

Personality Development

The gradual and ongoing process of change in personality characteristics, influenced by biological, social, and environmental factors throughout an individual's life.

Caspi

Refers to Avshalom Caspi, a psychologist known for his work in life-course developmental psychology, notably linking genetic factors to behavioral outcomes.