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

Question

Quizplus · Accepted Answer

When market interest rates decline sharply, the company can refinance its debt at a lower cost by calling its existing higher-interest bonds and reissuing new bonds at the lower rate.

Which of the Following Events Would Make It More Likely