Ranger Inc

question 12

Multiple Choice

Ranger Inc. would like to issue new 20-year bonds. Initially, the plan was to make the bonds non-callable. If the bonds were made callable after 5 years at a 5% call premium, how would this affect their required rate of return?

• A) there is no reason to expect a change in the required rate of return.
• B) the required rate of return would decline because the bond would then be less risky to a bondholder.
• C) the required rate of return would increase because the bond would then be more risky to a bondholder.
• D) it is impossible to say without more information.
• E) because of the call premium, the required rate of return would decline.

---

Definitions:

Substantia Nigra

Black nuclear mass in the midbrain; involved in coordinating movement and maintaining muscle tone.

Basal Nuclei

A group of nuclei in the brain involved in the control of voluntary motor movements, procedural learning, and emotions.

Tegmentum

Floor of the midbrain.

Reflexively Turn

An automatic and involuntary response to a stimulus that results in turning or moving part of the body.