The costs of bond refunding are the call premium and the underwriting cost on the new bond issue.

Question

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Bond refunding typically involves calling existing bonds and issuing new ones. The call premium is the cost that must be paid to bondholders when existing bonds are called, while the underwriting cost refers to the fees charged by underwriters for managing the new bond issue. Both of these are costs associated with bond refunding.

The Costs of Bond Refunding Are the Call Premium and the Underwriting