When a Callable Bond Sells at a Premium, the Likelihood

question 66

Multiple Choice

When a callable bond sells at a premium, the likelihood of a call is ________ and the yield to worst is the yield to ________.

• A) high, call
• B) low, call
• C) low, maturity
• D) high, maturity

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Definitions:

Credit Rating

An assessment of the creditworthiness of a borrower, either a business or a governmental entity, reflecting their ability to repay borrowed money.

Bondholder

An investor who owns bonds issued by a corporation or government, entitling them to receive fixed interest payments.

Board Of Directors

A group of individuals elected by shareholders to oversee the management and governance of a corporation.

Convertible Bond

A type of bond issued by corporations that can be converted into a predetermined number of shares of the issuing company's stock at certain times during the bond's life, usually at the discretion of the bondholder.