Callable Bonds May Not Be Called Immediately After a Rate

question 46

Multiple Choice

Callable bonds may not be called immediately after a rate decrease because

• A) the call price if often at a premium above par value.
• B) the call provision is often deferred for several years after the bond's issue.
• C) recalling the old bonds and issuing new ones involves non-trivial flotation costs.
• D) all of the above.

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Definitions:

Spinal Cord

A slender, elongated structure composed of nerve tissue that stretches from the medulla oblongata in the brainstem to the lumbar segment of the spine.

Nerve Tissue

A type of biological tissue that is responsible for communication within the body through electrical and chemical signals.

Cerebral Hemisphere

One of the two symmetrical halves of the brain, each responsible for controlling the opposite side of the body and specialized in different functions.

Speech

The expression of thoughts and feelings by articulate sounds, typically using language that is understood by others.