As interest rates decline, bond refunding should become more common.
Bond issuers will seek to call bonds early and refinance them at declining lower rates in the same fashion that homeowners might refinance the mortgage on their home.

Question

Quizplus · Accepted Answer

This statement is true. When interest rates decline, it becomes more advantageous for bond issuers to refinance their existing bonds at lower rates, much like how homeowners may refinance their mortgages when rates drop. This is known as bond refunding.

As Interest Rates Decline, Bond Refunding Should Become More Common