Multiple Choice
Which of the following statements is FALSE?
A) The holder of a callable bond faces reinvestment risk precisely when it hurts: when market rates are lower than the coupon rate she is currently receiving.
B) When yields have risen,the issuer will not choose to exercise the call on the callable bond.
C) The issuer will exercise the call option only when the prevailing market rate exceeds the coupon rate of the bond.
D) A callable bond is relatively less attractive to the bondholder than the identical non-callable bond.
Correct Answer:
Verified
Correct Answer:
Verified
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