Call privileges on bonds are a disadvantage to investors precisely because the price of the callable bonds may decline.

Question

Quizplus · Accepted Answer

Call privileges on bonds are considered a disadvantage to investors primarily because the issuer can redeem the bonds before their maturity when interest rates decline, potentially depriving investors of higher interest income, not because the price of the callable bonds may decline.

Call Privileges on Bonds Are a Disadvantage to Investors Precisely