Erin invested part of her savings in 15-year Bellandro Bay Brewery bonds paying 6% interest annually,with a maturity date of 2020.The bonds' call provision was 2012.If interest rates go down to 4.5% in the year 2012,Bellandro Bay is not likely to call in this bond issue.

Question

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If interest rates decrease to 4.5%, Bellandro Bay is likely to call the bonds to refinance at the lower rate, reducing their interest expenses.

Erin Invested Part of Her Savings in 15-Year Bellandro Bay