Other Things Held Constant,if a Bond Indenture Contains a Call

question 102

Multiple Choice

Other things held constant,if a bond indenture contains a call provision,the yield to maturity that would exist without such a call provision will generally be ____ the YTM with it.

• A) Higher than
• B) Lower than
• C) The same as
• D) Either higher or lower,depending on the level of call premium,than
• E) Unrelated to

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Definitions:

Price Ceiling

A maximum price set by law that can be charged for a good or service, below the equilibrium price, leading to a shortage.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market balance.

Immediate Effect

The instant impact or outcome that follows a specific action or decision, without significant delay.

Price Floor

A government- or authority-imposed minimum price that can be charged for a good or service, intended to prevent prices from falling too low.