Bonds with the callable feature tend to sell at lower prices than bonds without such a feature.

Question

Quizplus · Accepted Answer

Bonds with the callable feature allow the issuer to redeem the bond before maturity, which can reduce the value to the investor if interest rates have decreased since the bond was issued. Investors therefore demand a higher yield on callable bonds, which results in lower prices compared to non-callable bonds.

Bonds with the Callable Feature Tend to Sell at Lower