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Holders of Callable Bonds Know That the Company Will Wish

question 36

True/False

Holders of callable bonds know that the company will wish to buy the issue back if interest rates fall,and therefore the price of the bond will not rise above the call price.


Definitions:

Cognitive Appraisal Theory

A theory in psychology that describes how personal interpretation of a situation and its relevance to the individual affects their emotional response.

Cannon-Bard Theory

A theory of emotion that argues emotions and physiological reactions such as sweating and trembling, occur simultaneously following a stimulus, rather than the emotion being a result of the physiological reactions.

James-Lange Theory

A theory hypothesizing that physiological arousal instigates the experience of emotion rather than the other way around.

Psychological

Relating to the mind or mental processes and how they affect behavior in different contexts.

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