Which of the Following Statements Is False

question 4

Multiple Choice

Which of the following statements is false?

• A) Before the call date, investors anticipate the optimal strategy that the issuer will follow, and the bond price reflects this strategy.
• B) The yield to maturity of a callable bond is calculated as if the bond were called at the earliest opportunity.
• C) A callable bond will trade at a lower price (and therefore a higher yield) than an otherwise equivalent non-callable bond.
• D) The price of a callable bond can be low when yields are high, but does not rise above the call value when the yield is low.