Which of the following events would make it less likely that a company would choose to call its outstanding callable bonds?

Question

Quizplus · Accepted Answer

An increase in interest rates would make it less likely for a company to call its outstanding callable bonds because they would have to pay a higher interest rate if they issued new bonds to replace the called bonds. This would increase the cost of borrowing for the company. On the other hand, a decrease in interest rates would make it more likely for a company to call its outstanding callable bonds because they could issue new bonds at a lower interest rate, reducing their borrowing costs. The increase in price of outstanding convertible bonds or a decrease in call premium would not necessarily impact the company's decision to call its callable bonds.

Which of the Following Events Would Make It Less Likely