Issuers of bonds are most likely to call them in when
A) the prevailing rate of interest exceeds that stipulated on the bonds.
B) when investor confidence goes down.
C) the prevailing rate of interest is less than that stipulated on the bonds.
D) when investor confidence goes up.
E) when the government revises its capital gains tax law.

Question

Quizplus · Accepted Answer

When the prevailing rate of interest exceeds that stipulated on the bonds, the issuer can call the bonds and issue new bonds at a lower interest rate, saving money on interest payments.

Issuers of Bonds Are Most Likely to Call Them in When