Question

Which of the following is true?

		secured bonds are riskier than unsecured bonds given all other aspects are the same.
		bonds with sinking funds are riskier than bonds without sinking funds given all other aspects are the same.
		Callable bonds are riskier than non-callable bonds given all other aspects are the same.
		bonds with sinking funds are riskier than bonds without sinking funds given all other aspects are the same.

Answer 1

Callable bonds are riskier than non-callable bonds given all other aspects are the same.

Due to the fact that the bond is redeemable before the maturity date. Therefore the bondholder does not know as to when a company can call the bond back as callable bonds can be redeemed before maturity. Than if the bond is redeemed bondholder loses out on interest payments which he would have recieved if bond was redeemed at maturity. Hence callable bonds are riskier than non-callable bonds given all other aspects are the same.