SIE practice questionhardCall risk
A long-term callable bond is likely to be called early when:
- AInterest rates rise
- BInterest rates fall✓ Correct answer
- CInflation spikes
- DMarket volatility increases
Explanation
Why B — Interest rates fall
Falling interest rates prompt issuers to call high-coupon bonds and refinance at lower rates. Rising rates, inflation, or volatility do not prompt early calls.
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