Callable bonds
A) are called when interest rates decline appreciably.
B) have a call price that declines as time passes.
C) are called when interest rates increase appreciably.
D) are more likely to be called when interest rates decline and have a call price that declines as time passes.
E) have a call price that declines as time passes and are called when interest rates increase appreciably.

Question

Quizplus · Accepted Answer

Callable bonds are typically called when interest rates decline because the issuer can refinance at a lower rate. Additionally, the call price often declines over time, making it cheaper for the issuer to call the bond as it approaches maturity.

Callable Bonds