SIE practice questionmediumCallable Bonds
A callable bond will generally offer a ______ yield than a similar noncallable bond.
- ALower
- BThe same
- CHigher✓ Correct answer
- DTax-free
Explanation
Why C — Higher
Investors require higher yields for callable bonds to compensate for call risk. Noncallables have lower yields, and tax status is unrelated.
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