call provision gives bondholders the right to demand, or "call for," repayment of a bond Typically, calls are exercised if interest rates rise, because when rates rise the bondholder can get the principal amount back and reinvest it elsewhere at higher rates.

Question

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A call provision gives the issuer, not the bondholder, the right to repay the bond before its maturity, typically exercised when interest rates fall, allowing the issuer to refinance at lower rates.

Call Provision Gives Bondholders the Right to Demand, or "Call