Question

Which of the following events would make it LESS likely that a company would choose to...

Which of the following events would make it LESS likely that a company would choose to call its outstanding callable bonds?

a. An increase in market interest rates

. b. The company's bond credit rating is upgraded.

c. A financial crisis leading to low credit availability

d. Answers a and b are correct

e. Answers a and c are correct

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Answer #1

When the market interest rate will be higher, the company is not going to call the callable bonds because it will have to be reissue with higher interest rates.

when the market is having a financial crisis and there are low credit availability, it will mean that the bond will not be called because it will not be subscribed as there is a very low credit availability.

when the credit rating is upgraded it will mean that the company will be going with the newer bonds with lower yield.

Correct answer will be option (D) A and C.

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