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SIE: Debt Securities
SIE practice questionmediumCallable Bonds

Why would an issuer call its outstanding bonds before maturity?

  1. ATo refinance at lower interest rates✓ Correct answer
  2. BTo increase the coupon payments
  3. CDue to regulatory requirements
  4. DTo create new debt
Explanation

Why ATo 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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