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.

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Definitions:

Genetically Determined

Attributes or characteristics that are passed from parents to offspring through genes.

IQ

IQ, or intelligence quotient, is a score derived from standardized tests designed to measure human intelligence relative to a statistical norm.

Environmental Factors

External elements that can influence development, health, and behavior, including physical, social, and cultural aspects.

Fraternal Twins

Twins that develop from separate eggs and sperm, making them genetically distinct siblings born at the same time.