Which of the following is not true regarding callable bonds?
A)This feature allows the borrower to repay the bonds before their scheduled maturity date.
B)This feature helps protect the borrower against future decreases in interest rates.
C)Callable bonds benefit the bond investor.

Question

Quizplus · Accepted Answer

Callable bonds benefit the borrower, not the bond investor. This is because the borrower can call in the bonds and refinance at a lower interest rate if interest rates have decreased, saving them money on interest payments. However, this can be disadvantageous for the bond investor, as they may not receive the full amount of interest payments they were expecting if the bonds are called in early.

Which of the Following Is Not True Regarding Callable Bonds