If a Company Issued a Callable Bond at 6% Interest

question 23

Short Answer

If a company issued a callable bond at 6% interest, would it be likely to call the bond if the current rate of interest rose to 7%?

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Definitions:

Negotiable Instrument

A transferable, signed document that promises to pay the bearer or named party a certain sum of money either on demand or at a specified future date.

Drawer

In the context of financial instruments, the entity that writes or issues a check or draft.

Dishonored

A term used when a financial instrument like a check or promissory note is not accepted or paid on presentation.

Personal Defenses

Legal defenses that can be used to avoid enforcement of a contract or negotiation due to personal circumstances, such as minority, incapacity, or duress.