When Would It Make Sense for a Firm to Call

question 34

Multiple Choice

When would it make sense for a firm to call a bond issue?

• A) when the market price of the bond exceeds the call price, and market interest rates are greater than the bond's coupon rate
• B) when the market price of the bond exceeds the call price, and market interest rates are less than the bond's coupon rate
• C) when the market price of the bond is less than the call price, and market interest rates are greater than the bond's coupon rate
• D) when the market price of the bond is less than the call price, and market interest rates are less than the bond's coupon rate

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Definitions:

Resistance to Extinction

The persistence of learned behavior even after the original conditions that led to its acquisition have been removed.

Conditioned Stimulus

A formerly indifferent cue that, through association with an unconditioned stimulus, comes to provoke a conditioned response.

Stimulus Generalisation

The tendency for the conditioned response to be evoked by stimuli that are similar to the conditioned stimulus used during learning.

Stimulus Discrimination

The ability to differentiate between two or more distinct stimuli, responding only to the specific stimulus conditioned.