Which one of the following is correct concerning callable bonds?
A) There is an upper bound on the bond's price.
B) Callable bond prices are higher than those of comparable straight bonds.
C) Their attraction to the issuer increases as interest rates increase.
D)The bond investor owns the call option.

Question

Quizplus · Accepted Answer

Callable bonds have an upper bound on their price because the issuer can call the bond when interest rates fall, limiting the bond's price appreciation.

Which One of the Following Is Correct Concerning Callable Bonds