Issuers Tend to Call Bonds When Market Interest Rates Are

question 27

True/False

Issuers tend to call bonds when market interest rates are declining.

Understand the basic concepts of bond duration and its role in measuring interest-rate risk.

Determine the factors affecting bond duration and price volatility.

Calculate and interpret Macaulay and modified durations for various bonds.

Analyze the impact of yield to maturity, coupon rate, and time to maturity on bond duration.

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Definitions:

Sixth Amendment

A provision in the United States Constitution guaranteeing important rights in criminal prosecutions, such as the right to a speedy and public trial, the right to counsel, the right to confront witnesses, and the right to an impartial jury.

Confront Witnesses

A legal right, particularly in criminal cases, that allows the accused to question and cross-examine witnesses testifying against them in court.

Sixth Amendment

An amendment to the U.S. Constitution guaranteeing the rights of criminal defendants, including the right to a speedy and public trial, an impartial jury, and the assistance of counsel.

Nolo Contendere

Latin for “I will not contest it.” A criminal defendant’s plea in which he or she chooses not to challenge, or contest, the charges brought by the government. Although the defendant will still be convicted and sentenced, the plea neither admits nor denies guilt.