Corporations are less likely to repurchase callable bonds when market interest rates have risen.

Question

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When market interest rates have risen, the cost of borrowing for corporations increases. This makes it less attractive for corporations to repurchase callable bonds as they would have to pay a higher interest rate on new debt to replace the repurchased bonds. Therefore, corporations are less likely to repurchase callable bonds when market interest rates have risen.

Corporations Are Less Likely to Repurchase Callable Bonds When Market