Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?
A) The company's bonds are downgraded.
B) Market interest rates rise sharply.
C) Market interest rates decline sharply.
D) The company's financial situation deteriorates significantly.
E) Inflation increases significantly.

Question

Quizplus · Accepted Answer

When market interest rates decline sharply, a company is more likely to call its outstanding callable bonds to refinance the debt at a lower interest rate, reducing its interest expenses.

Which of the Following Events Would Make It More Likely