Which of the Following Is Correct Concerning Callable Bonds

question 43

Multiple Choice

Which of the following is correct concerning callable bonds?

• A) There is an upper bound on the bond's price.
• B) Their prices are higher than for straight bonds.
• C) Their attraction to the issuer increases as interest rates increase.
• D) The bond investor owns the call option.

---

Definitions:

Supply Shifts

Supply shifts refer to changes in the supply curve caused by factors other than price, such as technology, production costs, and supplier expectations, leading to different quantities being supplied at the same price.

Surplus

The situation in which the quantity of a good or service supplied exceeds the quantity demanded, often leading to lower prices.

Unregulated Market

A market where economic activities operate without direct governmental control, often resulting in high competition and consumer choice but potentially also in market failures.

Price Fall

A decrease in the cost of goods or services in the market, often leading to increased consumer demand.