Bonds called in are likely to be:
A)bonds already in default
B)reissued as new bonds with a lower interest rate
C)reissued as new bonds with a higher interest rate
D)junk bonds

Question

Quizplus · Accepted Answer

Bonds called in are typically reissued as new bonds with a lower interest rate because the issuer can take advantage of lower interest rates in the market. This can save the issuer money on interest payments and make the bonds more attractive to investors at the new lower rate. Bonds already in default (A) generally cannot be called in, and reissuing as new bonds with a higher interest rate (C) would not make financial sense for the issuer. Junk bonds (D) are typically high-risk investments with low credit ratings and are not necessarily related to bonds called in.

Bonds Called in Are Likely to Be