The City of St.Joe had outstanding $5 million of 6% bonds with a call provision.Due to changes in the prevailing interest rates, the City issued new bonds at 4.5% and used the proceeds to call the 6% bonds.This is an example of

Question

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This scenario is an example of debt refunding, where the City issued new bonds at a lower interest rate to pay off the outstanding higher interest rate bonds with a call provision. This process helps the City to save money on interest payments.