Which of the Following Statements Is False

question 5

Multiple Choice

Which of the following statements is false?

• A) When bond yields have increased, by exercising the call on the callable bond and then immediately refinancing, the issuer can lower its borrowing costs.
• B) To understand how call provisions affect the price of a bond, we first need to consider when an issuer will exercise its right to call the bond.
• C) If the call provision offers a cheaper way to retire the bonds the issuer will forgo the option of purchasing the bonds in the open market and will call the bonds instead.
• D) An issuer can always retire one of its bonds early by repurchasing the bond in the open market.

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