Under what conditions is a bond likely to be called?
A) The firm is in financial duress.
B) The firm is planning a massive expansion and needs to raise a lot of capital.
C) Interest rates have significantly declined.
D) The firm wants to increase its debt ratio.

Question

Quizplus · Accepted Answer

When interest rates have significantly declined, firms are likely to call existing bonds to refinance the debt at a lower interest rate, reducing their cost of borrowing.

Under What Conditions Is a Bond Likely to Be Called