SIE practice questionmediumCallable Bonds
Why would an issuer call its outstanding bonds before maturity?
- ATo refinance at lower interest rates✓ Correct answer
- BTo increase the coupon payments
- CDue to regulatory requirements
- DTo create new debt
Explanation
Why A — To refinance at lower interest rates
Issuers call bonds to refinance at lower rates. Increasing coupons or regulatory needs are not typical reasons, and calling does not create new debt.
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