With respect to the company that has issued a callable bond,

Question

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The value of a callable bond call option increases as interest rates decrease because the issuer can call the bond and refinance at a lower interest rate, leading to a decrease in its cost of borrowing. As a result, the call option becomes more valuable to the issuer, increasing the overall value of the bond. Changes in the stock price do not typically have a direct impact on the value of a callable bond call option.

With Respect to the Company That Has Issued a Callable