Refunding a bond occurs when the company sells more bonds of the same series with maturity and coupon equal to the bonds sold earlier.

Question

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Refunding a bond occurs when a company decides to issue new bonds to repay the existing bondholders, which may have a different maturity and coupon rate than the original bonds. This is done to take advantage of lower interest rates or to extend the maturity of the debt.

Refunding a Bond Occurs When the Company Sells More Bonds