- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 30. Valuation and Analysis of Bonds with Embedded Options
- Subject 1. Overview of Embedded Options
CFA Practice Question
The main cause of a call is:
B. A rise in interest rates.
C. Interest rates stay flat for a long time.
A. A decline in interest rates.
B. A rise in interest rates.
C. Interest rates stay flat for a long time.
Correct Answer: A
If interest rates have declined since a company first issued the bonds, it will likely want to refinance this debt at a lower rate of interest. In this case, company will call its current bonds and reissue them at a lower rate of interest.
User Contributed Comments 0
You need to log in first to add your comment.