A Bond That Is Callable Has a Chance of Being

question 79

True/False

A bond that is callable has a chance of being retired earlier than its stated term to maturity.Therefore, if the yield curve is upward sloping, an outstanding callable bond should have a lower yield to maturity than an otherwise identical noncallable bond.

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Definitions:

Production Possibility Frontier

A graphical representation showing the maximum quantity of different goods that can be produced with a given set of resources and technology.

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action or decision.

Production Possibility

An economic model that shows the maximum combination of goods or services that can be produced with a given set of resources.

Current State

The present condition or situation of a system, process, or subject of study.