What Is Most Likely to Cause a Situation Where a Callable

question 67

Multiple Choice

What is most likely to cause a situation where a callable bond will be called by the issuer?

• A) the value of the bond has dropped by a significant amount
• B) the yield on the bond has increased by a significant amount
• C) the yield on the bond has decreased by a significant amount
• D) any of the above

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Definitions:

Indirect Method

An approach used in cash flow statements to adjust net income for non-cash transactions and changes in working capital to calculate operating cash flow.

Operating Activities

Activities that constitute the primary or main activities of a business, including the production, sale, and delivery of its products and services.

Direct Method

A way of preparing the cash flow statement in which actual cash receipts and payments are reported, rather than adjusting net income for changes in non-cash accounts.

Net Cash Flow

The amount of cash generated or lost over a period, taking into account cash inflows from operations, investments, and financing.