Which of the following statements is true?
A) Convertible bonds offer higher yields than similar nonconvertible bonds.
B) Putable bonds offer higher yields than similar nonputable bonds.
C) Bonds with call options must offer higher interest rates than similar noncallable bonds.
D) All Treasury securities offer lower rates than any securities issued by business firms.
E) All of the above statements are true.

Question

Quizplus · Accepted Answer

Bonds with call options must offer higher interest rates than similar noncallable bonds because the issuer has the right to redeem the bond before maturity, which poses a risk to the bondholder.

Which of the Following Statements Is True