A Callable Bond Will Typically Have A(n)________ Yield Than an Otherwise

question 63

Multiple Choice

A callable bond will typically have a(n) ________ yield than an otherwise identical bond without a call feature because ________.

• A)lower,the firm loses flexibility with a callable bond
• B)higher,the firm loses flexibility with a callable bond
• C)lower,the option to call a bond is valuable
• D)higher,the option to call a bond is valuable
• E)identical,the call feature is without value

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Definitions:

Stimulus Generalization

The psychological phenomenon where a response to a specific stimulus becomes triggered by stimuli that are similar in nature.

Conditioned Response

The learned response to a previously neutral stimulus that has become associated with an unconditioned stimulus through classical conditioning.

Conditioned Stimulus

A previously neutral stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.

Extinction

The gradual weakening and eventual disappearance of a conditioned response.